of
preparation. The flags of independent states are used by their
dependencies unless there is an officially recognized local flag. Some
disputed and other areas do not have flags.

GDP: This entry gives the gross domestic product (GDP) or value of all
final goods and services produced within a nation in a given year. GDP
dollar estimates in the Factbook are derived from purchasing power
parity (PPP) calculations. See the note on GDP methodology for more
information.

GDP methodology: In the Economy section, GDP dollar estimates for all
countries are derived from purchasing power parity (PPP) calculations
rather than from conversions at official currency exchange rates. The
PPP method involves the use of standardized international dollar price
weights, which are applied to the quantities of final goods and
services produced in a given economy. The data derived from the PPP
method provide a better comparison of economic well-being between
countries. The division of a GDP estimate in domestic currency by the
corresponding PPP estimate in dollars gives the PPP conversion rate.
When converted at PPP rates, $1,000 will buy the same market basket of
goods in any country. Whereas PPP estimates for OECD countries are
quite reliable, PPP estimates for developing countries are often rough
approximations. Most of the GDP estimates are based on extrapolation
of PPP numbers published by the UN International Comparison Program
(UNICP) and by Professors Robert Summers and Alan Heston of the
University of Pennsylvania and their colleagues. In contrast, currency
exchange rates depend on a variety of international and domestic
financial forces that often have little relation to domestic output.
In developing countries with weak currencies the exchange rate
estimate of GDP in dollars is typically one-fourth to one-half the PPP
estimate. Furthermore, exchange rates may suddenly go up or down by
10% or more because of market forces or official fiat whereas real
output has remained unchanged. On 12 January 1994, for example, the 14
countries of the African Financial Community (whose currencies are
tied to the French franc) devalued their currencies by 50%. This move,
of course, did not cut the real output of these countries by half. One
important caution: the proportion of, say, defense expenditures as a
percentage of GDP in local currency accounts may differ substantially
from the proportion when GDP accounts are expressed in PPP terms, a