INTERNATIONAL GDP COMPARISONS - A NOTE:
In order to compare the GDP figures of two countries it is first necessary to convert them to a common unit of account (say, the US dollar). A fundamentally important question that arises when one tries to convert local currency GDP values into their US dollar equivalent values is the following: What exchange rate do we use to make the conversion – market exchange rates or purchasing power parity (PPP) based exchange rates?
The following piece from the IMF addresses the above question:
World Bank Data:
GDP Rankings (PPP) Based:
https://datacatalog.worldbank.org/search/dataset/0038129
GDP Rankings (Current $ - Market Exchange Rate) Based:
https://datacatalog.worldbank.org/search/dataset/0038130
GDP Rankings (PPP) Based:
https://datacatalog.worldbank.org/search/dataset/0038129
https://datacatalog.worldbank.org/search/dataset/0038130
In Purchasing Power Parity (PPP) terms, China became the world’s largest economy several years ago:
https://www.visualcapitalist.com/ranked-the-worlds-20-largest-economies-by-gdp-ppp/
US has the largest economy in the world when GDP comparisons are based on market exchange rates (current $). Given that the US dollar is quite strong at the moment, it makes the American economy look relatively larger than it would otherwise be.
A good piece from Noah Smith:
How do we measure whether China's economy is "ahead" of America's?
https://www.noahpinion.blog/p/how-do-we-measure-whether-chinas
Comparing economies is an inexact science.
https://www.visualcapitalist.com/ranked-the-worlds-20-largest-economies-by-gdp-ppp/
How do we measure whether China's economy is "ahead" of America's?
https://www.noahpinion.blog/p/how-do-we-measure-whether-chinas
Comparing economies is an inexact science.
Interesting Application:
China’s military rise: Comparative military spending in China and the US by Peter Robertson
https://cepr.org/voxeu/columns/chinas-military-rise-comparative-military-spending-china-and-us
Estimates of China’s military spending relative to the US vary widely from around one quarter of US spending to near parity. This column argues that the use of appropriate relative prices and unbiased economic measurement techniques greatly reduces the range of reasonable estimates. Given current data, China’s military expenditure in PPP terms is estimated to be $541 billion, or 59% of US spending, and its equipment levels are only 42% of US levels. Comparing trends over time shows that the US has matched China in recent years, albeit at the cost of a much higher defence burden.
https://cepr.org/voxeu/columns/chinas-military-rise-comparative-military-spending-china-and-us
Estimates of China’s military spending relative to the US vary widely from around one quarter of US spending to near parity. This column argues that the use of appropriate relative prices and unbiased economic measurement techniques greatly reduces the range of reasonable estimates. Given current data, China’s military expenditure in PPP terms is estimated to be $541 billion, or 59% of US spending, and its equipment levels are only 42% of US levels. Comparing trends over time shows that the US has matched China in recent years, albeit at the cost of a much higher defence burden.