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LATEST NEWS UPDATES | Measuring progress by Jayati Ghosh

Measuring progress by Jayati Ghosh

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published Published on Sep 23, 2009   modified Modified on Sep 23, 2009

A commission set up to look into alternative ways of measuring economic and social progress has added to the existing debate but not made any real advances. 

FOR some time now it has been clear that standard measurements of growth and development are inadequate and possibly even misleading. The problem of looking at only the aggregate gross domestic product (GDP) has been widely noted: its blindness to distributional issues and its inability to measure either the quality of life or the sustainability of any particular system of production, distribution and consumption. Despite these obvious limitations, however, the GDP remains the most widely used indicator of any economy and is generally the benchmark used to determine both performance and policy orientations of most governments.

The more wide-ranging human development index, or HDI, (which is the simple average of income measured by the GDP, health measured by life expectancy and education measured by literacy/enrolment) is clearly superior to the simple per capita GDP indicator. It is particularly useful because it often provides rankings of economies that are quite different from those based purely on per capita income. Nevertheless, even the HDI is increasingly being viewed as limited because it does not fully capture the complex relationships between current levels of income and growth, basic health and education indicators, and quality of life.

Several recent economic processes have made the need to search for alternative indicators of human well-being even more pressing. The global financial and economic crisis has exposed the problems and contradictions inherent in the earlier boom, which were not recognised by the wider public even though they were certainly discussed among a segment of largely unnoticed economists. Meanwhile, climate change and other evidence of ecological damage have highlighted how fragile and eventually unsustainable current patterns of economic activity are. And the distributional issues that were swept under the carpet in the age of dominant finance and resurgent capital are becoming prominent once again.

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Frontline, Volume 26, Issue 20, 26 September-09 October, 2009, http://www.frontlineonnet.com/stories/20091009262012900.htm
 

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