Alternative to GDP suggested

THE WORLD Economic Forum (WEF) advocates an alternative to gross domestic product (GDP) that will measure the level and rate of improvement in shared socio-economic progress.

In a report released yesterday ahead of the annual meeting in Davos, Switzerland, the WEF said economists and policy makers relied heavily on GDP as a measure of national performance – to the detriment of people’s living standards.

It said growth was not a sufficient condition for robustly rising median living standards.

“This message is particularly important to bear in mind at a time when global economic growth is finally rebounding to a more robust level. Policymakers should not expect higher growth to be a panacea for the social frustrations that have roiled the politics of many countries in recent years,” WEF said.

It said GDP, which measures the aggregate amount of goods and services produced in an economy, was the primary focus of policymakers and the media.

Progress WEF said relatively strong GDP growth could not “in and of itself” be relied on to generate inclusive socio-economic progress and broad-based improvement in living standards.

“Decades of prioritising economic growth over social equity has led to historically high levels of wealth and income inequality,” WEF said.

WEF has developed an alternative metric called Inclusive Development Index (IDI) which is an annual assessment of 103 countries’ economic performance that measures how countries perform on 11 dimensions of economic progress in addition to GDP.

According to WEF, the IDI was a project of the World Economic Forum’s System Initiative on the Future of Economic Progress, it “meant to inform and enable sustained and inclusive economic progress through deepened public-private co-operation through thought leadership and analysis.”