Why is it important to express per capita GNI in Purchasing Power Parity (PPP) international dollars?
The HDI attempts to make an assessment of 187 diverse countries and areas, with very different price levels. To compare economic statistics across countries, the data must first be converted into a common currency. Unlike market exchange rates, PPP rates of exchange allow this conversion to take account of price differences between countries. In that way GNI per capita (PPP $) better reflects people's living standards. In theory, 1 PPP dollar (or international dollar) has the same purchasing power in the domestic economy of a country as US$1 has in the US economy.
The new PPP values have been introduced in May 2014. The latest International Comparison Program (ICP) Surveys from which the PPPs were calculated, was done in 2011. It covered 199 economies from all geographical regions and from the OECD.
The 2014 Human Development Report is using the GNI per capita expressed in constant 2011 PPP international dollars. The new PPP conversion rates and a new base year – 2011 brought changes in values of GNI as well as in ranking of countries, in particular among the middle income countries. At the global level the GNI pc for 2011 when expressed in constant 2011 PPP international dollars is 33 percent higher than when expressed in constant 2005 PPP$, but countries were affected differentially.