Penn World Table

The Penn World Table (PWT) is a set of <a href="/facts/National_accounts/Ss4mUMc3">national-accounts</a> data developed and maintained by scholars at the <a href="/facts/University_of_California%2c_Davis/LTCyhaP5">University of California, Davis</a> and the <a href="http://www.ggdc.net">Groningen Growth Development Centre</a> of the <a href="/facts/University_of_Groningen/j7AbDh6z">University of Groningen</a> to measure <a href="/facts/Real_GDP/dSN7ff2p">real GDP</a> across countries and over time. Successive updates have added countries (currently 183), years (1950-2019), and data on <a href="/facts/Capital_(economics)/lLkzDdoB">capital</a>, <a href="/facts/Productivity/yXlzAjC2">productivity</a>, <a href="/facts/Employment/pqEUAhNv">employment</a> and <a href="/facts/Population/ArxshNuB">population</a>. The current version of the database, version 10, thus allows for comparisons of relative <a href="/facts/GDP_per_capita/k7JfYBuT">GDP per capita</a>, as a measure of <a href="/facts/Standard_of_living/oKRuG57a">standard of living</a>, the <a href="/facts/Productive_capacity/FhyA894V">productive capacity</a> of economies and their productivity level. Compared to other databases, such as the <a href="/facts/World_Bank/hIH9uUb2">World Bank</a>'s <a href="/facts/World_Development_Indicators/bae5PFIt">World Development Indicators</a>, the time period covered is larger and there is more data that is useful for comparing productivity across countries and over time.
A common practice for comparing <a href="/facts/GDP/zQRgyFKc">GDPs</a> across countries has been to use <a href="/facts/Exchange_rate/R4nLyEx1">exchange rates</a>. However, this assumes that this relative price – based on traded products – is representative of all relative prices in the economy, i.e. that it represents the <a href="/facts/Purchasing_power_parity/qpRMGaXG">purchasing power parity</a> (PPP) of each currency. By contrast, PWT uses detailed prices within each country for different expenditure categories, regardless of whether the output is traded internationally (say, computers) or not (say, haircuts). These detailed prices are combined into an overall relative price level, typically referred to as the country's PPP. The detailed prices used to compute PPPs are based on data published by the <a href="/facts/World_Bank/hIH9uUb2">World Bank</a> as part of the <a href="/facts/International_Comparison_Program/LeXjE6F5">International Comparison Program</a> (ICP).
An empirical finding documented extensively by PWT is the <a href="/facts/Penn_effect/re31nVTA">Penn effect</a>, the finding that real GDP is substantially understated when using exchange rates instead of PPPs in comparing GDP across countries. The most common argument to explain this finding is the <a href="/facts/Balassa-Samuelson_effect/jtT3MLJT">Balassa-Samuelson effect</a>, which argues that as countries grow richer, productivity increases mostly in manufacturing and other traded activities. This drives up wages and thus prices of many (non-traded) services, increasing the overall price level of the economy. The result is that poorer countries, such as China, are shown to be much richer based on PPP-converted real GDP than based on exchange-rate-converted GDP.
The database gets its name from the original developers at the University of Pennsylvania, <a href="/facts/Robert_Summers_(economist)/EYbRFo4G">Robert Summers</a>, <a href="/facts/Irving_Kravis/IATP3pPz">Irving Kravis</a> and <a href="/facts/Alan_Heston/oxpALLRc">Alan Heston</a>.

Penn World Table open-in-new

Penn World Table