Taiwan has delivered good infectious-disease fighting during this pandemic, an example of a high-quality cheap good.
Taiwan’s nominal GDP-per-capita is $25,000 (IMF). Its PPP-adjusted GDP-per-capita is $57,0000 (IMF). That’s a factor of over 2. In contrast, Korea’s is $31,000 at the exchange rate and $46,000 PPP (IMF).
Economists prefer the PPP adjustment over the exchange rate, since money is only as good as what it can buy.
But the adjustment is kinda tricky because it doesn’t factor in the quality of goods. Taiwan’s may be too much.
Is Taiwan’s PPP overstated?
It’s hard to imagine $57,000 incomes when people are barely getting by these days.
It tends to provide a lot of good things for cheap. Decent health care, quality metro system, high speed rail, fast internet are examples. None of that has resulted in burdensome taxes.
It all depends on what you include in the PPP basket of goods. A lot of things in Taiwan are dirt cheap, probably cheaper than they should be if you wanted to encourage people to not waste. Some examples are gasoline, power, water, health care. Rent is cheap too, but as you say the quality might not be adjusted for.
No way the quality is adjusted for. My apartment that costs me NT15,000/month wouldn’t exist in the US. This one is at least up to spec with safety escapes (unblocked windows in bedroom) and a shower with a door that separates it from the toilet, but in the US you’d be paying at least USD800 (probably more) for a comparable size (though probably better quality) if you’re living in a small city (think South Bend or Milwaukee) and easily $1,500-$3,000 in a larger city. Again, for a comparable quality space. And I don’t live in a big bustling area of Taiwan.
Most ‘stuff’ is cheaper in Taiwan. The higher costs sit in groceries, purchasing property and imported cars. Can’t think of much else thats more expensive here than other developed countries.
PPP does tries to account for quality but its not that easy. How do you convert quality to quantity? It requires assumptions and conventions.
Another thing to note is IMF uses PPP data from ICP which updates its data every 6 years. The last time they published their data was in 2014 when they provided data for 2011.
