[lbo-talk] GDP per capita/Russia

Paul paul_ at igc.org
Thu Jun 24 10:09:35 PDT 2004


Doug writes:
>Chris Doss wrote:
>
>>I don't know about Chinese, but Russians live considerably better than
>>one would think they do looking at the official stats, as I have stated
>>before, which makes me leery of them. (Shadow economy, fake taxes, lots
>>of stuff almost free, no rent, free summer house, stuff like that.)
>
>The WB has Russia at 23% of US per capita GDP on a PPP basis, or around
>$8,200/yr - but on a market exchange basis, about 10%.
>
>Doug

I have not looked at this in a long time - so Chris and others will perhaps correct me. But Russia's PPP statistics were (almost uniquely) distorted in a variety of directions at once. This reflects Russia's utterly unique situation.

First, the underlying national accounts lose the large amounts that are off the books (and, unlike some countries not limited a few sectors, like drug exports). Then, periodic politically driven announcements add newly "discovered" corrections, sometimes at key moments after reports of tense backroom negotiations with the statisticians and the Bretton Woods institutions (the IFIs pay a large part of the statistical salaries and expenses and have "their" own people).

Then we get to a plethora of PPP distortions, but uniquely conflicting: the low pay levels artificially boost the PPP adjustment (they get translated into US like terms just like China) while the resource exports do not get distorted (since these are true tradables). But the odd artifacts of Soviet era production, protected industries, customary arrangements, pool of profesional intellectual resources, etc also have to get translated into the U.S. terms even though there are certainly not part of any world market. THEN we get to the Europe vs America type distortions (probably not so big considering the rest) of lifestyles, residential patterns, second homes, good vacations etc.

Personally, I don't think one could get much from numbers with these sorts of errors in them. Except for the most obvious issues, most important policy or political propositions would get swamped by the margin of error.

Paul



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