All estimated costs of diabetes care in the e-Atlas are expressed in international dollars (see Data tables). To convert an estimate to US dollars, use the divisor provided for each country in the data tables. Divide the diabetes cost estimate by the appropriate divisor to get the price paid for diabetes care in exchange-traded US dollars. These divisors were derived from World Health Organization estimates of healthcare spending for 2002, and will give results in the currency value of US dollars in 2002.
Example: Cameroon
Using R2 as the estimated cost of diabetes care
Divide R2 by the divisor = 3186.4 divided by 2.19 = 1,455
Estimated cost of diabetes care per year was USD1,455 (currency value in 2002)
To compare amounts of output, organisations such as the United Nations and World Bank and economists use the 'international dollar'. The international dollar (I$) is a hypothetical unit of currency that has the same purchasing power in every country. Conversions from local currencies to international dollars are calculated using tables of purchasing power parities (PPP). The United Nations International Comparison Program (UNICP) coordinates the calculation of PPP. A large 'market basket' of goods, ranging from food, clothing and footwear to hospital equipment and compensation of government employees, is defined and as many countries as possible collect prices for the items in the basket. National Annual Average Prices are computed from these data. PPP estimates for advanced economies are considered quite reliable while PPP estimates for developing countries are often rough approximations.
Traditional currency conversion is based on the relative prices of currencies in currency markets - what buyers and sellers of currencies are willing to pay or accept in payment at some specific time. The resulting exchange rates dictate the prices that everyone involved in international trade or travel must accept. Exchange-traded US dollars provide a basis for comparing what each country actually pays for diabetes care.
However, exchange-based conversion gives poor comparisons of how much diabetes care each country produces because many kinds of goods and services are traded only inside the country's borders, especially in countries that are less industrialized*. These almost exclusively national or local markets are loosely linked to international prices and exchange. Where unemployment and underemployment are high and wages correspondingly low, a US dollar in local markets will buy many more goods and services than it will in the United States. In fact, in developing countries with weak currencies, the exchange rate estimates of economic output are typically only one-fourth to one-half of what the country actually produces.
Much of diabetes prevention and care is produced locally for local consumption. Healthcare professionals and providers, ministry officials, and others involved in medical care earn far lower wages in some countries than in others. Even global manufacturers of drugs and medical supplies set prices locally, based in part on what they think each country can or will pay. To be able to compare countries on the amount of medical care for diabetes each produces, it makes sense to adjust estimates to account for the purchasing power of money in local markets.
* In addition, because market exchange rates are based on short-term factors and are subject to substantial distortions from speculative movements and government interventions, comparisons based on exchange rates, even when averaged over a period of time such as a year, can yield unreliable and misleading results.