Mis(s)trusting GDP
THE king of contemporary economic indicators is, of course, Gross Domestic Product (GDP). … GDP has effectively become a proxy for national success or failure. It has the power to decide elections, overthrow governments, and launch popular movements.” Zachary Karabell wrote these lines in his article, (Mis)leading Indicators : Why Our Economic Numbers Distort Reality, in the March/April 2014 issue of Foreign Affairs.
Princess GDP has long been married to a country's development measurement. But nowadays mistrust has grown within this marriage. Everyone agreed that the marriage has been financially good, but few admitted that it could indicate actual wellbeing of people in a country. As a result, other indicators like Happiness Index and Human Development Index (HDI) emerged as suitable candidates, but they failed to ditch GDP forever. So the love affairs, legitimate or illegitimate, with GDP continued. Finance ministers all over the world remain as fond of it as before and hardly agree to sever relations with it. Now, a young Social Progress Index (SPI) has appeared that looks directly at the face of a country's development, not at her parent's financial strength in GDP.
Simon Kuznets, the Nobel Prize winning father of Miss GDP, was skeptical about how much it can tell about the overall development and happiness of people in a country. He warned in 1934: “The welfare of a nation can scarcely be inferred from a measurement of national income as defined by the GDP.” Though Mr. Kuznets was soft about the danger of the daughter's growing into a humbug someday, US president-candidate Robert Kennedy was not. Thus he poured his venom against her in his election campaign in 1968: 'Gross National Product counts air pollution and cigarette advertising, and ambulances to clear our highways of carnage. … It counts napalm and counts nuclear warheads and armored cars …. It does not include the beauty of our poetry or the strength of our marriages …. It measures neither our wit nor our courage … it measures everything in short, except that which makes life worthwhile.”
Afterwards, movements, books, articles, TV talks all were out together to destroy the reputation of the beloved of economists and policymakers across the world with an urge to go beyond GDP. Heavyweight economists like Joseph Stiglitz and Amartya Sen strengthened the campaign to find new indicators for measuring the actual wellbeing of people. Social Progress Index is the latest outcome of these unrelenting efforts. Policymakers in Bangladesh will do well if they analyse the data in its 2014 report, in which Bangladesh has stood 99th among 132 countries.
The writer is Research and Publication Officer, Centre for Development Innovation and Practices (CDIP).
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