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About the Author

Asza Valdimarsdottir
Stringer (Reykjavik, Iceland)

Born in Iceland, raised in Malaysia and Thailand. Did an Undergraduate degree in English Literature in Ontario, Canada and an MA in International Broadcast Journalism in London, United Kingdom. Currently a stringer for an International (undisclosed) News Agency in Iceland. Oh, and Asza is pronounced 'ah-sha'.

Post

Beer, Burgers & Development

Published 17th April 2010 - 8 comments - 2505 views -

Not so long ago, information was released in Iceland that confirmed that the banks in Iceland had overstated their worth by

 ISK7.4 billion before the collapse. A comment was later made that went something like this: "At first, that sounds like a lot, but then again, a beer in Iceland is ISK1200.." and it got me thinking: Is a country's worth really measured by the cost of its beer? If a beer is expensive, then really, over-estimating a few banks value by a few billion ain't so bad. Right?

On a bit of a tangent from that, but somewhat related is the 'Burgernomics'. The idea that a McDonald's Big Mac should be the 

same price in every country and comparing actual exchange rates with the price of a Big Mac indicates whether a currency is under- or overvalued. What about countries that don't have a McDonald's? Are those countries labelled as 'developing' because of the lack of a fast-food joint? I have travelled quite a bit, and gone on a school-trip too many. It it almost without fail, that when a big group of students goes abroad, seeing a McDonald's is the "light". Even if you don't ever go to one in your home country, seeing one abroad somehow makes everything 'familiar' again.

But back to the original question: If a country's worth is measured by the cost of a Big Mac in that country, does that mean a country is considered a 'developing' one on the basis of lacking a McDonald's? Back in the fall (no pun intended) of 2008, Iceland's banks collapsed and headlines across the world declared the country 'bankrupt'. Soon thereafter, the two McDonald restaurants that existed were shut down because importing McDonald's products became too expensive. I can't say that the loss of McDonald's has caused a flood of tears in Iceland, but if in only circa 18 months a small island in the North Atlantic has been declared bankrupt by the world media, put on sale on ebay and lost its ability to partake in 'Burgernomics' - does Iceland then qualify, on some absurd scale, as a developing nation?

 


Category: Media | Tags: iceland, location, big, north atlantic,


Comments

  • Andrei Tuch on 19th April 2010:

    Well - the question is, can Iceland feed itself and support its standard of living without foreign aid? If not, it’s developing. raspberry


  • Ian Sullivan on 19th April 2010:

    @andrei - where did you get that definition of developing country from.

    @Asza - I guess for a real answer you’d need to look at how it performs in the health service, education standards etc to really understand if Iceland is a developing country. Although it is an interesting question to think about how exactly does a seemingly developed nation slide down the scale towrds developing?


  • Andrei Tuch on 19th April 2010:

    Ian - common sense, really. I think it’s as close to an objective definition as we will get, because at least it is quantifiable.

    It also gives us a real goal. And you could argue that both countries that receive structural aid (such as Estonia, which is still a net recipient of EU money) and countries that have a long-running budget deficit have a lot of development to do.

    As to sliding down the scale - an interesting case study would be for example Argentina after its currency crisis.


  • Jodi Bush on 19th April 2010:

    @ Andrei - so if Greece is bailed out by the EU, will it be classed as a developing country?


  • Andrei Tuch on 19th April 2010:

    Yes. Absolutely, no two ways about it.


  • Bill Hinchberger on 21st April 2010:

    Beers and burgers are things that many people consume wherever they are. Plus, what you see is what you get: a pint; a bun with a ground beef patty and a pickle on top. That’s why The Economist uses the Big Mac Index and why Regular Joes compare the price of beer in different cities. It is a common denominator. It comes naturally.

    But here’s a question: what do non-drinking vegans use to compare purchasing power around the world?


  • Andrei Tuch on 21st April 2010:

    The cost of a soy chai latte and a stick of celery.


  • Marianne Diaz on 21st April 2010:

    Well, I’m abstemious and have no idea at all of the cost of a beer in here, but I found really interesting, while searching for Venezuela’s Big Mac Index, the idea of “the amount of time that an average worker in a given country must work to earn enough to buy a Big Mac.” And after that, I became incredibly sad to find out that Venezuela has the 4th place on “slowest earned” (126 minutes).
    McDonalds isn’t so cheap in here, and I personally hate it. But I do feel, due to factors as inflation and exchange rates, that the capability of consumption is a more realistic way to measure the wealth of a given population.


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