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Robert Summers and Alan Heston published data for 130 countries that used purchasing power parity, rather than market exchange rates, to compare GDP across countries. As a result, measured per capita incomes of developing countries rose relative to per capita incomes in developed countries. This is most likely because:

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Answer:

Price of goods in developing countries are generally lower than price in developed countries.

Explanation:

Purchasing power parity is the method that uses the price of a basket of goods between different nations to compare and find absolute purchasing power between different currencies.

For example if the price of an apple in London is $4 and in France it is $2, then France has a better purchasing power as they use less money to buy the good.

If PPP was used instead of market exchange rate to compare GDP, because of the lower prices in developing countries the per capita income of developing countries will rise compared to developed countries.

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