The Alternative Big Mac Index
You may have heard of the Economist’s Big Mac Index. It looks at the cost of a Big Mac in capital cities of the world, compares it with the cost of a Big Mac in the United States and, through the principle of Purchasing Power Parity, works out whether a local currency is over- or under-valued in comparison with the US Dollar.
Now Simon’s World, in association with CSR Asia are trying to set up an Alternative Big Mac Index, working out how many hours a MacDonalds employee would have to labour in order to actually afford one of the Big Macs he or she sells. So, if there is a MacDonalds in your neck of the woods, help them out by letting Simon know the average wage of a McDonalds’ employee in your town.
Oh, in case you were wondering, here are the figures for Russia and the Former Soviet Union this June:
- Russia, $1.48 = 52% undervalued
- Estonia, $2.31 = 24% undervalued
- Georgia, $2.00 = 34% undervalued
- Latvia, $1.92 = 37% undervalued
- Lithuania, $2.31 = 24% undervalued
- Moldova, $1.84 = 40% undervalued
- Ukraine, $1.43 = 53% undervalued
Which shows that, in a lot of ways, the economies of much of the Former Soviet Union are much healthier than might often be presumed when looking at pure GDP figures. Undervalued currencies should also give a boost to exports.