Appendix 2: Estimate of Iraq's Current GNP

Our household surveys suggest that workers earned $25-30 per month in casual labour. This was generally more than wages paid in the state sector. At $30 per month total wages per worker on an annual basis are $360. Cross country comparisons show profits fall in the range of 0.25 to 0.75 times the wage bill. Assuming that they are 0.5 times the wage bill, and assuming the labour force participation rate is 50%, then GNP per capita equals $270 (before subsidies, rents or indirect taxes). Since these calculations are very rough, the bias could be substantial and in either direction, but they show dollar GNP has fallen sharply from the levels above $2000 recorded in the late eighties. An alternative measure comes from the National Accounts data published by the Iraqi authorities. According to these Iraqi GDP was 128.1 billion dinar in 1993. The average exchange rate during the year was 260 ID/dollar, hence GDP per capita would equal $26. Since inflation and controlled prices for rations would bias the value of GDP, this also will be a very rough estimate. Given the discrepancy between these measures, we use a rough estimate of $200 per capita in the paper.