The economic statistic most commonly used to compare the economies of different countries is Gross Domestic Product (GDP), the total monetary value of all the goods produced within a country in one year.
But looking at the GDP alone gives us a slightly skewed picture because it doesn’t account for the different costs of goods in different countries. To account for this, economists created a statistic called Purchasing Power Parity.
But what is purchasing power exactly? You can think of it like this:
There’s two men- one in Beijing and one in New York. The man in New York makes $80,000 a year, while the man in Tokyo only makes $60,000.
But the average price of goods in Beijing is significantly cheaper than in New York. So although the man in New York technically has more money, he actually has less purchasing power than the man in Beijing.
Check out the map below to compare the purchasing power of minimum wage in 26 different countries around the world, courtesy of Lisa Mahapatra and the International Business Times (click to enlarge):