By Lucas Juan Manuel Alonso Alonso.
How do you think the progress of a country can be measured?
GDP is not everything
GDP is a measure of a country’s economic activity, and therefore it should not be considered a measure of a country’s well-being. Besides, it is necessary to be aware about which GDP components lead to economic growth, because a same amount of GDP does not mean identical situations.
GDP takes into account all income no matter how it is generated and some GDP components may harm human health and/or the natural environment. For instance, think about a country in which its government is forced to set lower environmental standards to maintain the country competitiveness. Consequently, factories freely pollute several zones or inclusive part of the country, but this way of manufacturing generates high economic growth and employment and the country competitiveness is based on this way to produce. From an economic point of view, the economic growth improves the living standards of citizens but at the same time pollution makes its inverse contribution to the quality of life of citizens.
Nor does GDP give any indication of how a country’s wealth is distributed. In some LDCs, many of these resource-rich countries, we have a high rate of economic growth and, at same time, abject poverty. The way wealth is being distributed is the most important factor for a country’s well-being, because large social inequalities destroy a country’s progress.
“Progress of a country must be a balance between economic and human development”
“If economic growth is being distributed on just a few people, it will never contribute to the progress of the countries that generate it”
An increase of social inequality indicates a setback in the progress of a country’s people. Such a situation is indicative of a reduction in the Human Development Index. Therefore, a country can be progressing economically at the expense of a decline in human development. Obviously, this situation cannot be understood as progress of a country because economic growth has to be a vehicle that supports human development. It has no sense to talk about economic growth without to take into account its contribution to human development.
“Economic growth is not the goal itself but rather a means to reaching the goal: the progress of a country on all fronts”
“Economic growth does not seem to be the problem or the solution, but a fairer distribution of wealth… isn’t it a logical conclusion?”
So, does it make sense to consider GDP as a country’s progress indicator? Obviously, it doesn’t.
Measuring a country’s progress beyond GDP
There are several indexes that measure the extent to which countries contribute to the socio-economic progress of their citizens, such as Human Development Index, Legatum Prosperity Index, Social Progress Index…These indicators are tools that measure the extent to which countries contribute to the social, economic and environmental progress of their citizens. Consequently, they take into account factors such as basic human needs, level of income, cost of goods and services, working conditions, quality and availability of employment, access to quality healthcare, life expectancy, poverty level, incidence of disease, quality and availability of education, cultural, political and religious freedom, economic and political stability, infrastructures quality, environmental quality…
All of them aim to develop a more meaningful measure separating economic growth from social and environmental well being. Thus, some developed countries perform well in terms of GDP and poorly on some other measures and therefore, the findings of these indexes illustrate that economic growth does not always lead to social and environmental progress.
Perhaps, the underlying fascinating question to be asked could be: To what extent a developed country with a very low social progress score can be categorized as a true developed country?
Pressing issues to be tackled:
First of all, for the correct determination of the indexes mentioned, it is essential that the governments of the different countries permit information to flow freely in order to ensure that the implementation of such important tools be able to properly asses the different issues outlined herein. With regard to these indexes and progress, I would like to express my opinion focusing more in particular on social progress made by the advanced economies.
We have experienced in the past few years a huge setback in the indexes related to social progress in many developed countries. Take, for instance, the issue of basic human needs and we might well ask: How many people in developed countries are below a minimum nutrition and basic medical care? How many people in developed countries are below the poverty line? Particularly the more vulnerable groups, such as:
1. Child poverty (it is on the rise in several developed countries, some countries within the euro-zone are a good case in point)
2. Abject poverty (the same as that described in the preceding point)
3. Growing number of food banks in many advanced economies…
About issues like satisfaction with housing, access to electricity, personal safety…etc. It raises questions, for instance: How many people in developed countries are satisfied with the availability of good affordable housing? How many people in developed countries, as a result of higher energy prices, are suffering energy poverty?
And obviously as a consequence of this global deep crisis triggered by an economic system based mainly on financial speculation jointly with inappropriate economic measures and structural reforms, the income gap between a country’s richest and poorest people is enlarging and thus personal safety and rights are under serious threat in some developed countries, as well as the real entrepreneurial spirit (genuine enterprises) strongly discouraged. Why am I saying “genuine enterprises”? The answer is very simple: There are many “enterprises and entrepreneurs” arising from political clientelism (cronyism and patronage), and that kind of enterprises and entrepreneurs do not generate wealth and prosperity in our societies because they are not competitive.
As a result of the current and future economic situation in several developed countries, which translates into drastic spending cuts in education, research & development, health and other public necessary services, whilst, paradoxically, at the same time, unnecessary public spending increases, for example unproductive public infrastructure development and bureaucratic wastage, we might well ask: How many people in developed countries don’t have (and likely they will not have it) access to competitive education, information, communication, internet, freedom of speech and press, health, wellness…? Reducing unproductive public structures rather than cutting key government functions (education, public health, social security, unemployment support…) may signify one step towards progress and equity.
“An over-dimensioned state structure does not lead to a competitive and prosperous society” There are fundamental issues related to democracy, political and social stability that are addressed and weighted by these indexes in order to reflect more appropriately a country’s social progress, such as:
1. Opposition parties play an important role and enjoy real power
2. Minority groups have reasonable self-government and/or can participate in the government through informal consensus
3. Political corruption
4. Factors that undermine freedom
5. Government censorship laws about freedom of speech and press, democracy quality
6. Independence of the judiciary
7. Country’s laws protect private property rights
8. Religious freedoms
9. Equal opportunities in the economic and social spheres.
…etc.
“The quality of these kinds of issues leads a country to stable governments and economies, whilst simultaneously creating a social justice environment which directly implies unity between people”
“A true unity between the people of a country has a direct effect on the progress as a country”
In my view, it would be also necessary to take into account other factors such as:
Governments ruled by one-party for enormously long periods of time, laws encouraging the establishment of strong bi-partisanship in policy, religious hierarchies exercising their power in the political, university sphere and public life… In fact, these kinds of actions increase corruption risks endangering country’s long-term democratic transparency because politicians can place family, relatives and friends into the state or private firms and, thus, in this way they create lobbies that ensure them a large number of unconditional voters, as well as to legislate appropriate laws in order to protect themselves and their clique of collaborators.
Because some important questions arise in relation to these issues, we could well ask ourselves:
“Is a leadership without meritocracy a true leadership?”
“Is a country with a low democratic quality a true democracy?”
Boosting investments in human development:
Some countries may have a similar per capita GDP and marked differences in their social progress indicators. Therefore, a good question to ask is: To what extent is GDP contributing to improve a country’s social progress? A key issue for policymakers should be to carry out necessary investments to promote human development with greater equity. As it says on page 20 of the 2013 Human Development Report: “…Investments in human development are justified not only on moral grounds, but also because improvements in health, education and social welfare are key to success in a more competitive and dynamic world economy…” In the light of this sentence, I think some important questions need to be considered: What kinds of investments in human development are being carried out in some developed countries (with particular reference to the euro-zone)? Isn’t it a short-sighted policy? Isn’t it necessary a shift in attitudes? Can we say that we are on the path of progress?
Deep barriers to global progress:
Lack of transparency, unequal opportunities that cause high unemployment rates among highly skilled professionals and brain drain, socio-economic measures that depend on the exploitation of disadvantaged groups, unproductive economic structures and state governmental organizations undertaking speculative operations, impunity in corruption and illicit gain cases are, among others, factors that erode the faith of citizens in democratic institutions.
“The higher the degree of corruption in a country, the lower the level of progress”
A crucial step forward to genuine social progress:
Can we talk about a country’s progress if we do not link it with better living conditions of all inhabitants? I think, no social progress will be achievable if the governments of each country and international community do not prioritise people and encourage the real economy rather than speculative stock market profits.
