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Measuring a country's progress How do you think the progress of a country can be measured?

by Lucas Juan Manuel Alonso Alonso

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”

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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 wellbeing. 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.

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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

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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?”

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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.

References:

Social Progress Index

http://www.socialprogressimperative.org/es/data/spi

Legatum Prosperity Index

http://www.prosperity.com/

Human Development Index

http://hdr.undp.org/en/content/human-development-index-hdi

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Thank you very much for taking the time to read my article!

Published in:

The Daily Journalist http://thedailyjournalist.com/the-strategist/measuring-a-country-s-progress/

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