– Mississippi has similar GDP per capita ($53061) than Germany ($54291) and the UK ($51075), so why are people in Mississippi so much poorer with a much lower living standard?

Question

I was surprised to learn that poor states like Mississippi have about the same gdp per capita as rich developed countries. How can this be true? Why is there such a different standard of living?

In: Economics

Answer 1

Why is no one talking about exchange rates? The US dollar is valued much higher than it should be, so when you look at GDP in nominal terms, things get distorted. Economists look instead at GDP per capita at *purchasing power parity*, which accounts for weird exchange rates. Germany’s GDP per capita at PPP is $69,115, and UK’s is $58,906.