Real progress indicator
The Genuine Progress Indicator ( GPI ) (German indicator genuine progress or genuine progress indicator ) is an economic indicator that the gross domestic product replace (GDP) and to better assess the performance of its place economies should allow. It emerged from the previous Index of Sustainable Economic Welfare (abbreviation ISEW from English Index of Sustainable Economic Welfare ).
The GPI measures whether the economic growth of a country and the associated increased production of goods and services actually lead to increasing prosperity or well-being . The difference between the GDP and the GPI can be compared with the difference between the gross and the net balance sheet of a company, whereby only the latter is decisive for the future viability of a company. Similarly, if the measured GDP growth has been generated by overt or hidden costs such as environmental damage, crime, or declining health, the GPI growth is zero.
Numerous highly developed countries (especially the EU and Canada ) have been trying for a number of years to develop common criteria for determining a comparable and objective GPI. The GPI must therefore not be viewed as a firmly defined and generally accepted index for measuring wealth. Rather, it represents an attempt to overcome the weaknesses in GDP and is currently subject to regular changes.
Motivation for creating the GPI
In economics, progress is usually measured in terms of money . The GDP measures all produced values and thus represents the total sum of the economy of a country. This also includes damage values, so that for example car accidents and tanker accidents increase the GDP.
Even its inventors state that GDP was by no means intended as an indicator of wellbeing. It was not planned to use its values as an argument for or against certain political measures, as has now become common.
The GPI, on the other hand, encompasses the availability of ecosystem services and their degradation by human activities. The GPI thus outlines a broader concept of progress, and it also includes sustainability . The harvest of agricultural products, for example, achieves a higher GPI value - with the same harvest volume - if the required water comes from naturally regenerating water sources such as groundwater and rivers, but a significantly lower one if non-renewable, fossilized water is pumped from aquifers for irrigation . On the other hand, this output difference would have no effect on GDP.
Some economists, including Herman Daly , John B. Cobb, and Philip Lawn , suggest that growing an economy through expanded production of goods and services has both benefits and costs - and not just benefits as GDP suggests. In some situations, expanded production and other market activities harm health, culture and welfare, something that economists often ignore. In particular, this recourse to the boundary hypothesis ( English threshold hypothesis ) by Manfred Max-Neef , the presumed that is outweighed by a damage resulting from a certain threshold value in a macro system, the benefits additionally generated.
In a “real progress indicator” Philip Lawn has developed a theoretical framework for determining the costs of economic activities and weighing them up against their benefits. This is intended to show whether the economic development that is taking place improves or rather makes it more difficult for people to live. According to Lawn's model, the cost of economic activity determines the following potentially harmful elements:
- Mining resources
- crime
- Ozone depletion
- Failing families
- Air , water and noise pollution
- Loss of farmland
- Loss of wetlands
(Source: Lawn 2003, p. 108, Table 1)
Theoretical foundation of the GPI
The need for a real indicator of progress to replace biased indicators like GDP was set out in a study of inefficient growth in the 1980s by Marilyn Waring , who examined biases in the UN system of national statistics.
In the early 1990s, a consensus had developed in development theory and ecological economics , according to which a growing amount of money actually goes hand in hand with falling well-being. Essential natural and social services were paid for in cash, which expanded the economy but worsened the quality of life.
The topic remains controversial, as GDP is an ideal indicator of economic progress, especially for neoclassical economists. For them it is initially not a problem if rising healthcare costs or the need to buy expensive bottled water lead to an increase in GDP. The GPI, on the other hand, would identify both as a problem, not a progress.
Results
At least eleven countries (including Germany, England, Austria and Sweden) have recalculated their wealth according to preliminary GPI methods. The data for the European countries and the USA show that the development of prosperity has lagged significantly behind the development of GDP, especially in the last few decades. In some countries, GPI calculations even suggest a significant decline in prosperity. While the GDP for the USA suggests a doubling of prosperity in the period 1950 to 1995, the GPI shows a strong decline of 45 percent, particularly in the period 1975 to 1995. The prosperity of Chile stagnated during the same period according to the very similarly calculated index of sustainable economic prosperity (ISEW). Austria, Germany, Italy, the Netherlands, Sweden and Australia, on the other hand, were able to record an increase in prosperity, although this is relatively modest compared to the development of GDP.
Further development by the EU
In November 2007, the European Commission, together with the European Parliament , the Club of Rome, the OECD and the WWF , organized an international conference under the motto Beyond GDP with the aim of working out the most suitable indicators for measuring prosperity. At the end of the conference, the Commissioner for the Environment , Stavros Dimas , promised to develop a sustainability scoreboard and announced further steps. On August 20, 2009, the EU Commission published a strategy paper entitled “GDP and more: measuring progress in a changing world”, in which it proposed “five measures to better measure progress”.
The five fields of action include:
- Development of a comprehensive environmental index and improved social indicators
- More up-to-date information provision for decision-makers
- More accurate reporting on distribution and inequalities
- Development of a European scoreboard for sustainable development
- Inclusion of ecological and social concerns in the national accounts.
As a result, more than 20 indicators were presented - including the GPI - that could be included in the new prosperity indicator.
Web links
Individual evidence
- ↑ REAL WEALTH , Linda Baker, Questia, May 1, 1999
- ^ A b International examples , Friends of the Earth , November 28, 2008
- ↑ ABOUT BEYOND GDP , Beyond GDP, measuring progress, true wealth and the well-being of nations
- ↑ Beyond GDP: Summary notes from the Beyond GDP conference , Beyond GDP, November 2007
- ↑ Communication from the Commission to the Council and the European Parliament - GDP and beyond: measuring progress in a changing world . In: EUR-Lex . August 20, 2009.
- ↑ GDP and beyond: Measuring progress in a changing world (PDF) . European Commission, August 20, 2009.
- ↑ Beyond GDP - EU Roadmap 2009
- ↑ Beyond GDP - Indicator Exhibition