![\"Commentary\"](\"http:\/\/dominicanewsonline.com\/news\/wp-content\/uploads\/2011\/07\/commentary2.jpg\")
The Global Finance magazine published late last year a ranking of the world\u2019s poorest countries based on a measurement of the standard of living (or, on the other side of the same coin, how rich or poor is a country).<\/p>\nThe Global Finance magazine published late last year a ranking of the world\u2019s poorest countries based on a measurement of the standard of living (or, on the other side of the same coin, how rich or poor is a country).<\/p>\n
At the international level, the standard of living is usually measured on the basis of per capita income, which is simply the total market value of goods and services produced in an economy (the Gross Domestic Product, abbreviated to GDP) in a year divided by the average population at the time. This is in itself not a measure of personal income but provides an indication or estimate of the spending capacity of the average consumer in a country.
\nThe measure allows for the comparison of the relative performance of countries.<\/p>\n
To allow for comparisons across countries, the per capita income levels of countries are converted to a common currency, usually the United States dollar, the world\u2019s most widely used currency. The computation is done by using the corresponding bilateral nominal exchange rate between the United States dollar and the other country\u2019s currency. There are problems, however, in using the nominal market exchange rate. The main one is that the movements or changes in the exchange rate affect the size of the GDP and hence the per capita income. Increases in GDP may reflect increases in prices (inflation) rather than actual growth in production volumes. Another problem is that the prices differ across countries. A United State dollar can purchase a lot more in India than in the United States because prices are lower in India.<\/p>\n
To overcome these problems, international organizations like the World Bank and the IMF based per capita income on Purchasing Power Parity (PPP). It takes into account the relative cost of living and inflation rates of countries. PPP is the exchange rate that equalizes the price of a basket of identical goods and services in different countries, the so-called Law of One Price. So, for example, if a basket of identical goods is sold for US$100 in the United States and 10,000 rupees in India, the PPP is 100 rupees per U.S. dollar. There are, of course, certain complications with this theory.<\/p>\n
Consumption baskets differ across the world. Transportation and information costs may prevent the prices of traded goods from being equalized in different countries. Nevertheless, the research shows that PPP is valid in the long run. Exchange rates between countries at similar level of economic development tend to fluctuate around levels that lead to similar prices for a given basket of goods.<\/p>\n
The Global Finance magazine, drawing on an IMF\u2019s database, ranked the poorest countries in 2015 based on their GDP PPP per capita. Countries were arranged in ascending order, starting with the country with the lowest per capita income. Dominica was ranked number 84 out of a total number of 185 countries. Dominica\u2019s per capita income was gauged at $11,029 (international dollars), which is 7.3 per cent less than the median average income of $11,897 of the distribution. Dominica is in the 45th percentile, which means that 55 per cent of countries, including the other OECS countries, had a higher standard of living.<\/p>\n
The highest ranked OECS country was Antigua and Barbuda, which was at number 132 and had an income level 52.2 per cent higher than that of Dominica. In comparison with the rest of the Windward Islands, Dominica was not too far from Saint Lucia and St. Vincent and the Grenadines which were ranked 89 and 88, respectively. In the case of the former, Dominica\u2019s income lagged by 3.5 per cent and was 3.1 per cent behind the latter. The difference with Grenada was much higher at 8.8 per cent.<\/p>\n
Trinidad and Tobago emerged as the wealthiest Caribbean country at 151, which put the oil-rich country in the 82nd percentile. Haiti, unsurprisingly, was rated the poorest Caribbean country at number 20, just above the 10th percentile, on the list. The top five countries with the highest standards of living were Qatar, Luxembourg, Singapore, Brunei and Kuwait. The five poorest were The Central Africa Republic, The Democratic Republic of the Congo, Malawi, Liberia and Burundi.<\/p>\n