Time to look beyond GDP

Time to look beyond GDP

The success of any country today is gauged by the growth of its economy, as measured by a seemingly all-powerful number: gross domestic product or GDP.

The key goal for most government officials, leaders and policymakers across the world is to achieve infinite growth, to sustain and push this single-digit figure to surpass those of previous years and make sure it's higher than those of immediate peers.

This obsession overlooks the fact that in today's rapidly changing world, some of the data used to calculate GDP are irrelevant or obsolete. Many countries have adopted new methodologies or adjusted old ones to obtain a more accurate view of how their economies are performing.

In Thailand, for example, The National Economic and Social Development Board (NESDB) recently changed from calculating growth as a factor of prices in a fixed base year (1988 in Thailand's case) to "chain volume measures" (CVM). The latter uses the year prior to the one under review, providing a more accurate representation of the goods and services being produced.

The CVM method, in line with the UN-supported System of National Accounts (SNA), will allow Thailand to better calculate growth using a year-by-year comparison, as opposed to using relative prices from a single year nearly three decades ago.

In India, although it still uses a fixed base year, the statistics ministry has changed the base year from 2005 to 2012. The result was 6.9% GDP growth as opposed to 4.7% when using the previous base year. Which one is more accurate? We'll leave the economists to sort it out.

For better or worse, we're addicted to GDP as the measure of how well we're doing. It would be preposterous, most people believe, if a large economy such as China, India or the United States were to declare that it would adopt Bhutan's Gross National Happiness (GNH) model.

The sad reality is that the elements used to calculate GDP only include income, consumption and production — or money, money and money. In other words, the more confident investors and consumers are, the more money will flow in and out of the economy. That and only that means the country is better off.

I have to wonder, though, where this sort of growth really leads a country. After all, there is a good argument for measuring quality of life, human development, happiness or environmental health, if economists can agree on ways to quantify them.

We live in an era of mindless growth where people worship economic figures. But the deteriorating environment, growing inequality and the outsized power of multinational corporations are all signs that GDP is an imperfect measure of our true well being.

Many countries are experiencing rapid economic growth, yet as their richest citizens flaunt the rewards of success, its poorest seem no better off. The young and unfortunate face ever-diminishing opportunities.

Inequality happens when the division of wealth results in a small group of people holding the majority of a nation's capital. The lower and middle classes have less access to capital and fewer resources, and are unlikely to break out of this unfortunate cycle.

Earlier this year, a report by Oxfam showed that the share of the world's wealth owned by the richest 1% increased from 44% in 2009 to 48% in 2014 and would exceed 50% by next year. The biggest gaps were in the most developed economies such as Japan, the United States, Spain and the UK.

Perhaps it's time for all of us to be more considerate and develop a new framework that can measure successful development that takes other social factors into consideration. By shifting away from relying solely on GDP, a more holistic approach will allow the country to develop sustainably and inclusively, rather than mindlessly.

Thankfully, some organisations have been promoting more sustainable development and a more mindful approach to evaluating what progress means. The consequences of prosperity must not be the health of our earth.

For example, the United Nations Environment Programme (UNEP) recently released a new report providing guidelines and solutions to sustainably manage the fast-growing appetite for natural resources in the region.

However, any recommendation or handbook can only lead a country toward meaningful, positive change if governments, leaders and policymakers adopt the concept of sustainability seriously and act on it.

To quote the American author and environmentalist Edward Abbey: "Growth for the sake of growth is the ideology of the cancer cell." And indeed we will be living in the cancer cell if we don't start taking preventive actions today.

Do you like the content of this article?

Virus world update

EU ministers fail to agree on recovery plan as German cases rise, UK PM Johnson stable in ICU; China lifts Wuhan lockdown as Trump slams WHO.


BMA offering covid testing at home

The Bangkok Metropolitan Administration is offering testing at home for people who suspect they may have caught the coronavirus disease.


Chinese caught protected reef fish

PHUKET: Two Chinese tourists have been arrested for catching protected reef fish among the coral in Ao Nui bay in Muang district.