The pedigree of IEC conversion factors for per capita GNP computations for the World Bank's operational outlines and atlas

Per capita GNP, calculated according to the Bank's Atlas methodology, constitutes The Bank's main criterion for classifying countries to determine eligibility for various beneficial borrowing terms, and also as a broad criterion for distinguishing countries by income groups. The analysis in this paper underscores the operational and practical implications of a systematic and well documented approach to the choice and sources of conversion factors that underpins the Bank's Atlas methodology for per capita income estimates. In principle, the Bank adopts the official annual average exchange as the preferred source for exchange rates for the per capita GNP calculations. However, where this rate is clearly inappropriate, such as when the calender-year rate does not coincide with the fiscal-year national accounts data, or when distortions in the trade and payments system make the official rate an unreliable linkage between relative prices of traded goods, IEC uses an alternative exchange rate(conversion factor). This paper briefly explains how these alternative exchange rates are calculated, the rationale behind them, and the footnoting features in the Bank's Economic and Social Database (BESD) that make these calculations more transparent to users of the data.