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What is PPP (Purchasing Power Parity)

Encyclopedia of Information Science and Technology, Second Edition
Is a rate of exchange that accounts for price differences across countries, allowing international comparisons of real output and incomes.
Published in Chapter:
Global Digital Divide
Nir Kshetri (University of North Carolina at Greensboro, USA) and Nikhilesh Dholakia (University of Rhode Island, USA)
DOI: 10.4018/978-1-60566-026-4.ch262
Despite rapidly falling costs of hardware, software and telecommunications services, a wide gap persists between rich and poor nations in terms of their capabilities of accessing, delivering, and exchanging information in digital forms (Carter and Grieco, 2000). According to a report published by the United Nations Conference on Trade and Development in 2006, a person in a high-income country was more than 22 times likely to use the Internet than someone in a low-income country (UNCTAD, 2006). The ratios were 29 times for mobile phones and 21 times for fixed phones. An estimate suggested that more than 95% of e-commerce transactions in 2003 were industrialized countries (Tedeschi, 2003). Another estimate suggested that 99.9% of business-to-consumer e-commerce in 2003 took place in the developed regions of North America, Europe, and Asia Pacific (Computer Economics, 2000). This is a form of commercial divide (UN Chronicle, 2003). Another estimate suggests that 80 percent of the global trade in high technology products originates from Europe, the U.S., and Japan (Bowonder, 2001) and 92 % of the patents granted in the world are owned by the members of Organisation for Economic Co-operation and Development (Archibugi and Iammarino, 2000). Whereas high-income countries have income 63 times that of low-income countries, the respective ratios are 97 for PCs, 133 for mobile phones, and over 2,100 for Internet hosts (Dholakia and Kshetri, 2003). While reliable data on e-commerce transactions are not available, the ratio is likely to be even higher for e-commerce transactions since e-commerce is virtually non-existent in many developing countries. The pattern indicates that the gap between developed and developing countries is wider for more recent technologies such as PC, mobile phone, and the Internet than for technologies which were introduced earlier. This article provides an assessment of three computer networks that redefine the conventional definition of market value by allowing developing nations and communities (Brooks, 2001) reap the benefits of modern ICTs: Global Trade Point Network (GTPNet) and Little Intelligent Communities (LINCOS).
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