An e-newsletter for the International Comparison Program. From the Global Manager

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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized ICP News Volume 2, No. 3 July 2005 What is ICP? The International Comparison Program (ICP) is a global statistical initiative involving national, regional and international agencies. It produces internationally comparable price levels, expenditure values, and Purchasing Power Parity (PPP) estimates informing users such as national policy makers, economists, international organizations and academics about the relative purchasing power of citizens of countries. The PPP between two countries is the rate at which the currency of one country needs to be converted into that of a second country to ensure that a given amount of the first country s currency will purchase the same volume of goods and services in the second country as it does in the first. The collection of price data and calculation of PPPs in over 110 countries of the world is coordinated by the ICP Global Office in the World Bank. ICP results combined with the Eurostat-OECD PPP Program will bring the total number of participating countries to about 160, making it the largest international data collection exercise in the world today. What is the ICP Data Validation Process? The first step in the ICP data validation process is to review individual prices collected through surveys following procedures similar to those countries use to review prices collected for their CPIs. This is done at the country level and known as intra-country data validation. Its primary purpose is to identify data entry or coding errors and unusual price variations. The next steps in the data validation process take place at the regional level and require close cooperation between National Statistical Offices and ICP Regional Offices. This is inter-country validation in which average prices for the same products in different countries are compared by converting them to common currencies using both exchange rates and PPPs. Its main purpose is to ensure countries are pricing the same items. It also provides another review of the average prices submitted by countries. The intra and inter country data validation processes overlap, are interdependent, and may go through several iterations. An e-newsletter for the International Comparison Program ICP News is produced by the ICP Global Office and the contents are copyrighted. For permission to use material please contact fhussain@worldbank.org. From the Global Manager Dear Readers As we enter the third quarter of 2005, we are anxiously watching the progress of ICP data collection across the regions. The regional reports in this issue provide details about each situation. The main challenge for us is to keep all regions and their respective countries on a similar time table and following data collection procedures to ensure comparable results are obtained. The Latin American region held a meeting in May with participating countries to review prices and preliminary PPPs resulting from their first data collection. This prompted most of the other regions to hold similar meetings even though not all countries in every region were able to submit prices in the first quarter. These data review workshops provided valuable insight into the quality of the data and the selection of items being priced. A common problem found was that not all countries were pricing the same thing. The quality of the data also varied considerably between countries. The good news is that this was learned early enough for corrections to be made for the third and fourth quarter data collections. Most regions will be holding similar data review workshops following the second data collection. The Global Office has been working very closely with Regional Coordinators and the Ring Countries to prepare the product list that will be priced to link the regions for the global comparison. The goal is to have a preliminary final list of specifications that Regional Coordinators can review in September. Since not all the regions used the Structured Product Description process to prepare their specifications, one of the challenges we face is to harmonize and standardize definitions used around the world. The end result of this exercise will not only be the Ring list for this round, but also a list that can be the launching point for future rounds of the ICP. Now that data collection is underway, one of the challenges remaining is to bring to closure issues concerning the remaining components of the GDP, aggregation of basic heading Purchasing Power Parities, fixity or maintaining regional comparability when the global comparison is done, and estimation of national annual prices where data collection does not cover the full year or country. The ICP Technical Advisory Group will be meeting in October to review these issues. Last, but not least, the next meeting with the Regional Coordinators will be held on September A very important part of this meeting is for each region to exchange information about the first data collections. Already questions have been raised about data access and where the data will reside at the end of the round. Papers on these important issues are being prepared for discussion with the Regional Coordinators and the TAG before being taken to the ICP Executive Board when it next meets on October 26. There are still many challenges remaining, but we have no doubt that the spirit of cooperation between the ICP regions and countries will prevail. Regards, Fred Vogel For more details about the International Comparison Program please visit our website:

2 Spotlight - Regional Office Progress Report ICP Africa Price Collection Survey: All core countries except Ethiopia have completed pilot surveys in capital cities and other collection centers in the country. An additional 18 non-core countries have also done the same. Data collection on household consumption in capital cities and other data collection centers has started in a total of 38 countries including 20 core countries. Sixteen countries have submitted data collected within the framework of CPI and/or outside the framework of the CPI. SPDs: The pharmaceutical product list received from the Global Office was reviewed on the basis of relevance and availability of products in Africa. The list has been translated into French and data collection forms in both French and English have been developed and will soon be sent to countries. The Housing questionnaire from the Global Office has been sent to countries and 27 have returned the completed questionnaire. Efforts are being made to collect responses from the others before sending them on to the Global Office. Equipment Goods SPDs are being translated into French and the Regional Coordinator is working on the approach to be used for data collection. Regional Meetings: A regional workshop was organized from May to discuss quality control of price data, quality aspects of field experiences and training of field staff, ensuring quality through the integration of ICP-CPI, ensuring the exchange of quality information between countries, sub regional organizations and the AfDB. Other issues included administrative and financial matters, adopting the 93-SNA, and review of the draft global list with the Ring Countries. Participants included 5 Ring Countries as well as Ghana, Libya, Mauritius, Morocco, Tunisia and Zimbab bwe, INSEE-France and ONS-UK. Others in attendance were sub-regional organizations, regional organizations, the World Bank and AfDB staff. Sub-regional workshops to review the Quaranta tables will be held in August-Septe ember for all four sub-regions (AFRISTAT, COMESA, ECOWAS and SADC). Status of preparation of expenditure weights and review of national accounts: Preparatory work on expenditure weights is underway. The first regional workshop exclusively focusing on National Accounts will take place from September 26-30, 2005, in Bamako, Mali, with attendance from all the countries. The Supply and Use Tables will be used as the framework for the workshop and ensuing activities of breaking down country GDPs. Fundraising: The main contributor to ICP-Africa was the African Development Funds, which allowed the AfDB to provide the four sub-regional organizations (AFRISTAT, ECOWAS, SADC and COMESA) with necessary resources to assist in the technical support and supervision of ICP activities in 51 participating countries. Funds for the first four months of data collection have been transferred to all countries by their relevant sub-regional organiz zations. In terms of additional contributions to the program, ONS-UK received financial support from DFID to support ICP- Africa and other capacity building activities over 3 years. Additional fundraising efforts made by AfDB yielded a contribution of US$ 675,000 from Japan. This wi ill be used to (i) expand the level of participation in the program of several countries; and (ii) monitor data quality in all participating RMCs, both in price statistics and national accounts. Most of the forthcoming regional and sub-regional workshops on price and national accounts data will be financed with these funds. Miscellaneous: AfDB staff and consultants from AfDB and ONS-UK visited forty-one countries in May-June to help countries, especially the 20 core countries, to start or improve the ICP data collection process. The visits focused on pre-survey activities, training of field staff, start of data collection, transmission of data and refinement of country budgets. Although pre-surveys, training of data collectors/supervisors and data collection started in December 2004 and January 2005 in a few African countries, these activities were carried out in May-June in most others as soon as funds were received from the AfDB. ICP ToolPack An integrated software system developed by the World Bank to compile, analyze and review price data for ICP. To learn more about the ToolPack visit 2

3 Spotlight - Regional Office Progress Report (continued) ICP Asia Pacific Price collection survey: Twenty-two countries have started collecting prices for the full consumption basket. Twelve countries have submitted average prices. Regional meetings were held to review the Quaranta tables on 4-8 July 2005 in which 4 countries participated. Another data review workshop with 8 countries took place on 8-12 August. The remaining countries will meet at the end of August. Major issues arising from these reviews include: Priced product does not comply with product specifications; In cases where no specific brands were mentioned, a mixture of high and low quality products were priced; Quotes were collected mostly from high end outlets; Product specifications were interpreted differently resulting in pricing of non-similar products; Units of measure were interpreted differently, e.g. pricing of pack of candles or average price of a single candle from the pack; Data entry errors; Errors in conversion of units; Treatment of services provided free of charge, e.g. service fee for ATM withdrawal; Mismatch in preferred quantities specified in ToolPack and product list resulted in a divergence in the prices recorded by countries using PCM for data entry and those using the Batch Upload Utility Function. (This was caused by modifications in Product Specifications not incorporated in the Tool Pack.) SPDs: A finalization workshop for Government, Health, Housing, Construction, and Equipment SPDs will be conducted on 1-6 August. Status of preparation of expenditure weights: Eighteen out of 23 countries have finalized weights. Regional meetings: The fourth Regional Advisory Board meeting was held on May Advocacy campaign: ICP brochures prepared by the Global Office were distributed to participating countries. Regional office staff is preparing course materials and practical exercises to be used in UNSIAP s First Regional Course on Price Statistics and Introduction to ICP scheduled to be held in Maldives in September. ICP LAC (Latin America and the Caribbean) Price collection survey: All 10 participating countries have priced the consumption basket for the first (March) and second quarter (June) of All countries have submitted average prices for all the 84 Basic Headings of the consumption basket of Latin America. Quaranta tables were reviewed in May 2005 by all participant countries for the first quarter and in August for the second quarter. The major issues were: Incomplete specifications; Errors in the collection process (errors of quantity, presentation); Problems of absence or disappearance of products; Too few price quotations; Small number of product for each BH; Problems of quality adjustments SPDs: Construction SPDs - meeting held with national accountants of participating countries to establish weights for the three sub-sectors. Preparations are underway to hire consultants to do the price collection during the period December 2005 February A meeting was held with national accountants of participating countries to establish weights for Machinery and Equipment SPDs. Preparations are underway to hire consultants to do the price collection in early 2006 (Jan-Mar 06). Government SPDs - selection of a few job descriptions are to be evaluated and rated for the next meeting in November, as a test for the methodology. Health SPDs - price collection for private health have begun in the region. Expenditure weights: Preliminary expenditure weights for consumption have been calculated by each of the National Statistical Offices. They will be revised during the third quarter to correct for errors. Regional meetings: Two major meetings were held. May review of prices of the first quarter for all ten participating countries and discussions on consumption expenditures weights, construction and machinery and equipment. August review of prices of the second quarter for all ten participating countries and discussions on consumption expenditures weights, construction and machinery and equipment and, government. Two meetings of Regional Coordinators were held in May and August. Teleconferences between Regional Coordinators occur on a weekly basis. 3

4 Spotlight - Regional Office Progress Report (continued) ICP Western Asia Price collection survey: Eight countries collected prices for Food & Beverages and Clothing & Footwear for the first quarter and submitted average price data. Eleven countries participated in a workshop held in May 2005 to review the Quaranta tables for the first quarter. The results of 4 countries were used to show how to read Quaranta tables, how to validate data and look for inconsistencies. All 11 participating countries are collecting prices for the full consumption basket for the second quarter. Results of the second quarter will be sent to the Regional Office by mid August. SPDs: Comments on Government SPDs have been sent to the Global Office. Health SPDs were translated and a provisional list was sent to countries. The Construction list was sent to countries with the advice to hire the services of a national consultant in the field of construction. Equipment SPDs have also been translated and are to be sent to countries. Only four countries have responded so far to the Dwellings Questionnaire. Regional meetings: The Western Asia ICP Executive Board will meet in Cairo on August. The meeting will be hosted by CAPMAS. A meeting between the Regional Coordinator and two National Accounts experts from the region will be held in Jordan on August in order to develop a methodology that fits the construction of consumption weights in all countries. A regional meeting to discuss the results of the second quarter will be held in Beirut from 5-9 September. Fundraising: A decision has been taken to approach the Arab Fund for Economic and Social Development (AFESD) to increase their contribution to ICP-Western Asia. Advocacy campaign: Two pamphlets were produced in Arabic and distributed along with 4 English pamphlets published by the Global Office in the Ministerial Meeting of ESCWA, held in Damascus, Syria in May Eurostat-OECD PPP Program Price collection survey: Although organized independently of the ICP, the Eurostat-OECD PPP Program is closely coordinated with it. Eurostat and the OECD collect prices of consumer goods and services by means of the rolling benchmark approach. With this approach, the basket of consumer products is divided over 6 surveys carried out over 3 years - in other words, two surveys each year. Five of the surveys whose prices will be used for the ICP benchmark year 2005 have already been executed. The sixth survey is in preparation and will be conducted in November/December The prices collected in 2004 and 2003 will be brought forward to 2005 by means of appropriate sub-indices from the consumer price indices of participating countries. With regard to capital goods, the survey of construction prices is currently underway. Prices for machinery and equipment will be collected in September-October The preparation of the product list for this survey is in its final stage. Eurostat and the OECD will receive 2005 price data for actual and imputed rents and for compensation of employees paid by general government in the first half of GDP expenditure weights are due by end-september ICP Regional Offices African Development Bank Asian Development Bank Federal State Statistical Service of the Russian Federation Interstate Statistical Committee of the Commonwealth of Independent States Bureau of Economic Analysis Foundation, Russia United Nations Economic Commission for Latin America and the Caribbean; Statistics Canada United Nations Economic and Social Commission for Western Asia Statistical Office of the European Union (Eurostat) and Organization for Economic Cooperation and Development (OECD) 4

5 ICP Global Office - Work in Progress Ring Comparison The ring list development work is progressing well. The Global Office prepared a draft list and sent it to the countries for their comments and inputs. The list was further reduced based on the responses from the Ring countries and sent back for further analysis and input. Countries were requested to conduct pre-surveys to determine the availability and representativity of the products in their markets. Regional coordinators agreed to meet with their respective ring countries and go over the list to develop a consolidated response for their regions, including detailed comments and suggestions on the specifications and price determining characteristics of the products. The Global Office has received the responses from all the regional offices which will be analyzed and used to prepare the preliminary final Ring list. This list will then be sent to the countries for review at the end of August and will be reviewed again with Regional Coordinators in the September meeting in Washington D.C. Equipment List Specifications Structured Product Specifications/Product Descriptions for about 200 equipment goods were sent to the regional offices in June along with technical notes, pictures and website addresses to help identify the products. The design of the equipment goods Product Specifications (PS) focuses on comparable functions for the equipment user because exact matching of equipment goods is problematic. In developing this framework, a hybrid PS and Structured Product Description (SPD) has been created that can be used as a PS in some cases and as a SPD in others, thereby allowing countries to price a product with some characteristics that differ from or are absent in the base line product specification. The characteristics provide enough consistent detail to permit hedonic price comparison where exact matching is not possible. This is a new approach and an important aspect of this method is that a region can customize the specifications for an available machine to achieve the functional characteristics described by the ICP survey. The PS/SPDs were developed by an international consultant in close consultation with Messrs Alan Heston and Kim Zieschang of the Technical Advisory Group (TAG). Construction Projects Specifications A new approach for construction survey has been developed for the ICP. The approach - Basket of Constructionn Components (BOCC) - was presented to and endorsed by the TAG earlier. A paper has been prepared addressing how the weights should be determined and how data collection should be carried out. The paper provides two approaches to develop detailed weights. The recommendation is that expert consultants provide the weights by regions or sub regions where national weights are difficult to compile. ICP Handbook A chapter on aggregation is in draft form and will be distributed to the TAG after adding a worked example. The first five chapters of the Handbook are being reviewed and updated to be consistent with methodology and procedures implemented since they were first written. ToolPack The Data Processing Module (DPM) in the ToolPack Version 1.2, is being enhanced to include a new feature for the countries to compute weighted price averages for individual products. This feature, which is fully developed, is now under test. The user documentation is being prepared. During the period May - August 2005, training on the ToolPack Version 1.2 with a focus on Quaranta diagnostics and data transfer to Regions, was provided to Russia and the CIS Statistics Office, West Asian countries, and African Development Bank staff. In addition, three training workshops on the ToolPack were conducted in Bangkok, Thailand (twice) and in Manila, Philippines to assist in country data review/validation and data transfer to the Region. Training and assistance was also provided, during this period, to Statistics Canada on Quaranta diagnostics and index number processing. Management and Budget A A short fall of over US $1.0 million remains to see the program to a full and successful conclusion. The funding issue will be a major item for the Executive Board when it next meets on October 26 as the data collection for equipment, construction, and the Ring Comparison could be affected unless the shortfall is resolved Manuals on the ICP website ICP Handbook ICP Operational Manual - what the national coordinators need to know Annex to the operational manual ICP Price Collectors Manual 5

6 Calendar of events Date Location Participants Contact Finalization workshop on non-household consumption products for Asia Pacific August 1-6, 2005 Bangkok, Thailand Host: Asian Development Bank Latin America coordination meeting Montevideo, Uraguay August 7, 2005 Host: INE (Instituto nacional de Data review workshop for Asia Pacific Bangkok, Thailand August 8-12, 2005 Host: Asian Development Bank Bangladesh; Bhutan; Brunei; Cambodia; China; Fiji; Hong Kong; India; Indonesia; Iran; Lao PDR; Macao; Malaysia; Mongolia; Nepal; Pakistan; Philippines; Singapore; Sri Lanka; Taipei; Thailand; Viet Nam; Derek Blades (resource person) Statistics Canada, ECLAC Bhutan; Fiji; Indonesia; Macao, China; Malaysia; Maldives; Mongolia; Sri Lanka Regional meeting in Latin America (MERCOSUR and Chile; Andean Community) Montevideo, Uruguay August 8-13, 2005 Host: INE (Insituto nacional de Statistics Canada, ECLAC, participating countries Regional meeting with national accountants (10 countries) in Latin America Montevideo, Uruguay August 8-13, 2005 Host: INE (Insituto nacional de Statistics Canada, ECLAC, participating countries ICP Western Asia executive board meeting CAPMAS, Cairo August 14-15, 2005 Host: CAPMAS Sub-regional data quality control workshop COMESA Headquarters August 24-26, 2005 Lusaka, Zambia Host: COMESA Sub-regional data quality control workshop August 29-31, 2005 Harare, Zimbabwe Host: SADC Sub-regional quality control workshop Abuja, Nigeria August 29-31, 2005 Host: ECOWAS Sub-regional data quality control workshop August 29 - September 2, 2005 AFRISTAT Headquarters, Bamako, Mali Host: AFRISTAT Data review workshop for Asia Pacific August 29 - Bangkok, Thailand September 2, 2005 Host: ADB Members of Western Asia ICP Executive Board AfDB and price statisticians from Burundi; Djibouti; Kenya; Madagascar; Rwanda; Sudan and Uganda; and ONS-UK Vaskar Saha (vsaha@adb.org) Vaskar Saha (vsaha@adb.org) Mohamed Al Badrawy (albadrawy@un.org ) Beejaye Kokil (b.kokil@afdb.org ) AfDB, and price statisticians from Angola, Botswana, Roland Rittenau Lesotho, Mauritius, Mozambique, Namibia, South Africa, (r.rittenau@afdb.org) Swaziland, Tanzania, Zambia and Zimbabwe; and ONS-UK AfDB and price statisticians from Gambia; Ghana; Liberia; Nigeria; Sierra Leone ICP-Africa National Coordinator and Deputy National Coordinators from Benin, Burkina Faso, Cameroon, Cape Verde, Central African Republic, Chad, Comores, Congo-Brazzaville, Cote d Ivoire, Democratic Republic of Congo, Equatorial Guinea, Gabon, Guinea Bissau, Guinea, Mali, Mauritania, Niger, Sao Tome, Senegal, Togo, Morocco, Tunisia; and INSEE - France Bangladesh; Cambodia; China; India; Lao PDR; Nepal; Pakistan; Singapore; Thailand; Brunei; Iran Western Asia regional meeting to discuss results of second quarter price data collection September Beirut, Lebanon Host: ESCWA National coordinators and price statisticians from Western Asia Central Group meeting on product list for Eurostat-OECD second consumer price survey 2005 Vienna, Austria PPP experts of 11 countries of the Central group, September 8-9, 2005 Host: Statistics Austria Eurostat, OECD Regional coordinators workshop Washington D.C., United States September 13-22, 2005 Regional coordinators and global office staff Host: The World Bank Maurice Mubila (m.mubila@afdb.org ) Abdoulaye Adam (a.adam@afdb.com) Vaskar Saha (vsaha@adb.org) Farah Nsouly (nsouly@un.org) Giuseppe Esu (Giuseppe.Esu@statistik.gv.at) Omar Hadi (ohadi@worldbank.org) 6

7 Calendar of events (continued) Date Location Participants Contact Northern Group meeting on product list for Eurostat-OECD second consumer price survey 2005 Helsinki, Finland PPP experts of 10 countries of the Northern group, September 15-16, 2005 Host: Statistics Finland Eurostat, OECD Regional national accounts workshop for Africa Bamako, Mali September 26-30, 2005 Host: AfDB National accounts experts from all participating countries: AFRISTAT, CEMAC, COMESA, ECOWAS, SADC, UEMOA, WAMI, INSEE, ONS- UK, ACBF, AfDB, ECA and the World Bank Southern group meeting on product list for Eurostat-OECD second consumer price survey 2005 Lisbon, Portugal PPP experts of the 10 countries of the Southern group, September 22-23, 2005 Host: Statistics Portugal Eurostat, OECD ICP Technical Advisory Group meeting Washington D.C., United States October 11-14, 2005 Host: The World Bank ICP Executive Board meeting Washington D.C., United States October 26, 2005 Host: The World Bank TAG and global office staff Executive Board members and global office representatives Overlap meeting on overall European product list for second consumer price survey 2005 Paris, France North, Central and South group leaders, Eurostat, October 17-19, 2005 Host: OECD OECD Western Balkan group meeting on product list for Eurostat-OECD second consumer price survey 2005 Lijubljana, Slovenia 5 countries of the Western Balkan group, group leader October 26-28, 2005 Host: Slovenian statistical office Slovenia, OECD, and Eurostat Latin America coordination meeting TBC November 13, 2005 Host: TBC Statistics Canada, ECLAC Planning meeting for Eurostat-OECD first consumer price survey 2006 Luxembourg, Luxembourg North, Central, South and Western Balkan group November 10-11, 2005 Host: Eurostat leaders, Eurostat, OECD Harri Kananoja (harri.kananoja@stat.fi) Luc Mbong Mbong (l.mbongmbong@afdb.org) Jose Mouronho (jose.mouronho@ine.pt) Omar Hadi (ohadi@worldbank.org) Omar Hadi (ohadi@worldbank.org) Francette Koechlin (Francette.Koechlin@oecd.org) Marjanca Gasic (Marjana.Gasic@gov.si) Silke Stapel (silke.stapel@cec.eu.int) Latin America regional meeting - Andean Community, MERCOSUR and Chile, National Accountants (10 countries) Montevideo, Uruguay November 14-19, 2005 Host: INE (Insituto nacional de Statistics Canada, ECLAC, participating countries Joint national accounts and PPP working group meeting for Eurostat-OECD program November 23, 2005 Luxembourg, Luxembourg Host: Eurostat National accounts and PPP experts from all 36 countries participating in the Eurostat-OECD PPP Program; Eurostat and OECD Regional meeting with national accountants in Latin America TBC November 23, 2005 STC, ECLAC, participating countries Host: TBC Joint national accounts and PPP working group meeting for Eurostat-OECD program November 24-25, 2005 Luxembourg, Luxembourg Host: Eurostat PPP experts from all 36 countries participating in the Eurostat-OECD PPP programme; Eurostat and OECD Silke Stapel (silke.stapel@cec.eu.int) Silke Stapel (silke.stapel@cec.eu.int) How to reach us: International Comparison Program (ICP), c/o The World Bank, 1818 H Street NW, MC2-209 Washington D.C USA Phone: (from inside the US) (from outside the US) Fax: ICP@worldbank.org 7