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The Poverty of Statistics and the Statistics of Poverty

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  • Alan Freeman

Abstract

This paper offers a critique of the picture of world growth and world inequality generally disseminated by international agencies. The positive view commonly presented depends on the widespread consensus that economic performance should be measured using ‘Purchasing Power Parity’ (PPP) statistics, instead of market exchange rates. Although originally conceived narrowly as a basis for comparing living standards, PPP indicators are now indiscriminately promoted as an unexceptionable standard for comparing and aggregating national income statistics. This article highlights the flaws in the PPP approach by accepting the claims made on their behalf at face value. It shows that, even on the basis of these claims, the wrong conclusions have been drawn. By comparing PPP and market exchange rate measures of inequality it shows that what really took place, at the end of the last century, was a systematic reduction in the prices of consumption goods in the Third World. PPP statistics have concealed this underlying and unsustainable trend, allowing it to be packaged as a stable reduction in poverty. Neither genuine growth, nor lasting poverty reduction was achieved over this period. The fall in the price of consumer goods masked a systematic failure to overcome the central problem of development—the high price of capital goods, which PPP statistics understate, and of intermediate goods, which they completely omit.

Suggested Citation

  • Alan Freeman, 2009. "The Poverty of Statistics and the Statistics of Poverty," Third World Quarterly, Taylor & Francis Journals, vol. 30(8), pages 1427-1448.
  • Handle: RePEc:taf:ctwqxx:v:30:y:2009:i:8:p:1427-1448
    DOI: 10.1080/01436590903321844
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    Cited by:

    1. Muhammad Masood Azeem & Amin W. Mugera & Steven Schilizzi & Kadambot H. M. Siddique, 2017. "An Assessment of Vulnerability to Poverty in Punjab, Pakistan: Subjective Choices of Poverty Indicators," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 134(1), pages 117-152, October.
    2. Alan Freeman, 2024. "The Geopolitical Economy of International Inequality," Development and Change, International Institute of Social Studies, vol. 55(1), pages 3-37, January.
    3. Azeem, Muhammad Masood & Mugera, Amin W. & Schilizzi, Steven, 2016. "Poverty and vulnerability in the Punjab, Pakistan: A multilevel analysis," Journal of Asian Economics, Elsevier, vol. 44(C), pages 57-72.
    4. David Gordon & Shailen Nandy, 2016. "The Extent, Nature and Distribution of Child Poverty in India," Indian Journal of Human Development, , vol. 10(1), pages 64-84, April.
    5. Juan Pablo Mateo, 2017. "Capital accumulation in the center and the periphery along the neoliberal period: A comparative analysis of the United States, Spain and Brazil," Working Papers 1723, New School for Social Research, Department of Economics.

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