In this article for Acting Man, I examine purchasing power parity, nominal exchange rates, and why comparisons between rich and poor countries are often distorted by simplistic economic measures.

The article argues that PPP can offer useful information, but it often exaggerates the real value available in poor countries by ignoring quality, hygiene, reliability, transaction costs, productivity, and institutional weakness. In practice, nominal exchange rates often reveal more about the true cost structure and productive capacity of a society.

Read the archived article at Acting Man via the Wayback Machine →