Grow first, develop later? The pitfalls of measuring economic growth using GDP (original) (raw)
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Gross Domestic Product (GDP) is, most certainly, an important yardstick for the economic performance of a country. Economists, policy makers, and central banks use GDP to gauge the health of the economy and direct fiscal and monetary policies to boost it. GDP, along with unemployment rate, are some of the most popular metrics discussed in newspapers and on cable news. Political pundits and lobbyists use GDP to buttress positions, especially on immigration.
Measuring Progress Beyond GDP: A Theoretical Perspective
Emerging Economy Studies, 2021
Inclusive development policies and comprehensive strategies are extremely critical aspects of the holistic progress of a nation. The measurement of considerable progress through the indicator/indicators is equally important. What if the selected indicator(s) are inappropriate? It can mislead people and policymakers. That is exactly what is happening to gross domestic product (GDP) as an indicator for measuring the overall progress of any nation. Through this academic article, an attempt has been made to address the following questions. Why do social, environmental, and human-centric indictors reveal an altogether different position concerning the health of the economy? Are we making deliberate mistakes while considering GDP as a gospel indicator for each and everything? Does it reflect the welfare aspects of human beings? Does it accurately reflect the well-being of people? The prolonged followed GDP-driven policies are inadequate for measuring the overall progress of a nation. The progress of a nation cannot be accurately reflected through GDP as an indicator. After an extensive review, the authors found that GDP was intentionally developed for measuring only economic activities which cannot be equated with social or human well-being. The possible outcomes of GDPdriven policies have been reflected through various human, social, and environment-centric indicators, which thoughtfully provide ample grounding to authors to fulminate against the philosophical notion of GDP as a universal indicator for measuring overall national progress/human well-being. This article can add to the literature of "why happiness movement." This article can provide sufficient theoretical grounds to move beyond GDP and look for some other holistic indicator(s).
Beyond GDP: Measuring and Achieving Global Genuine Progress
Ecological Economics, 2013
While global Gross Domestic Product (GDP) has increased more than three-fold since 1950, economic welfare, as estimated by the Genuine Progress Indicator (GPI), has actually decreased since 1978. We synthesized estimates of GPI over the 1950–2003 time period for 17 countries for which GPI has been estimated. These 17 countries contain 53% of the global population and 59% of the global GDP. We compared GPI with Gross Domestic Product (GDP), Human Development Index (HDI), Ecological Footprint, Biocapacity, Gini coefficient, and Life Satisfaction scores. Results show a significant variation among these countries, but some major trends. We also estimated a global GPI/capita over the 1950–2003 period. Global GPI/capita peaked in 1978, about the same time that global Ecological Footprint exceeded global Biocapacity. Life Satisfaction in almost all countries has also not improved significantly since 1975. Globally, GPI/capita does not increase beyond a GDP/capita of around 7000/capita.Ifwedistributedincomemoreequitablyaroundtheplanet,thecurrentworldGDP(7000/capita. If we distributed income more equitably around the planet, the current world GDP (7000/capita.Ifwedistributedincomemoreequitablyaroundtheplanet,thecurrentworldGDP(67 trillion/yr) could support 9.6 billion people at $7000/capita. While GPI is not the perfect economic welfare indicator, it is a far better approximation than GDP. Development policies need to shift to better account for real welfare and not merely GDP growth.
Development: Time to leave GDP behind
Nature, 2014
LEFT: IzzET KERIBAR/IML IMAGE GRoUP/EyEVINE; RIGHT: ABE Fox/AP 1 6 J a n u a r y 2 0 1 4 | V O L 5 0 5 | n a T u r E | 2 8 5 COMMENT COMMENT SUpplEMENTary iNfOrMaTiON S u p p l e m e n t a r y i n f o r m a t i o n | 1 6 J a n u a r y 2 0 1 4 | n a t u r e | 1 Supplementary Information to: Time to leave GDP behind (Comment in Nature 505, 283-285; 2014)
A High-Stakes Shift: Turning the Tide From GDP to New Prosperity Indicators
For more than half a century, Gross Domestic Product (GDP) has been viewed as the dominant indicator of economic and social progress. Its visibility and increasingly widespread use have contributed to the incorrect identification of economic growth (that is, increased GDP) with improved well-being for all. GDP’s supremacy as an indicator is being challenged, however: around the world, its limits are being questioned and solutions proposed for overcoming them. Given the broadly accepted idea that indicators affect reality, changing them is a high-stakes issue. Potentially, re-fashioning progress indicators may change our representations of the world, redefine our ends, and reinvent the means by which we pursue them. Such a change is part of a complex transformation currently taking place in our economic, social, political ideological systems. The four sections of this paper put forward the argument that the debate over new progress indicators is symptomatic of an historical turning point, and for this reason deserves careful attention. The first section reviews the specific context in which national accounting was established as an economic policy tool rooted in post-war social compromises. The second section discusses the three major justifications for the search for alternative indicators: social goals which economic growth captures inaccurately or not at all; the gap between economic growth and subjective assessments of «life satisfaction»; and, finally, the complex and urgent issue of the environment. The third section presents a concise overview of existing indicators that claim to supplement or replace GDP, dividing them among the three categories of justification described above and demonstrating the inextricable link between methodological and normative questions. From this follows the fourth and final section, which addresses the core questions raised by GDP and the problem of replacing it, and examines the hypothesis that our societies are at an historical turning point in which new compromises are emerging, in ways not yet entirely discernable to social actors.
Beyond GDP: The need for new measures of progress
2009
Abstract This paper is a call for better indicators of human well-being in nations around the world. We critique the inappropriate use of Gross Domestic Product (GDP) as a measure of national well-being, something for which it was never designed. We also question the idea that economic growth is always synonymous with improved well-being.
The paper is a conceptual review of the GDP as a measure of economic, national well-being and development sustainability and proposal for adoption of Social Progress Index as a better measures of sustainable economic growth. The study adopted secondary data analysis design and thematic approach to address the pertinent issues raised in the discourse. The overwhelmingly imperativeness to evolve new models, indicators and measures with broader views and coverage around long-term, sustainable socioeconomic and environmental development issues after about 87 years of inaccurately applying the GDP to measure what it cannot measure; The work demonstrated that there should be a preferred substitute of the Social Progress Index (SPI) to the GDP because of its inability to measure national well-being and development. It strengthens the call for Policy Makers, Public Financial and Economic Institutions Managers, and Development Partners to deemphasise the use of GDP as the determinant for all socioeconomic and development policy decisions as it was not designed to do that. The study recommends that a new formula, SPI be adopted for measuring economic growth and national well-being, one which makes for the shortcomings and limitations of the GDP be adopted: EP&NW = GDP