Growth indicator controversy

About Growth indicator controversy

Growth indicator controversy Per capita GrossDomestic Product (GDP per head) is used by many developmental economists as anapproximation of general national well-being. However, these measures arecriticized as not measuring economic growth well enough, especially incountries where there is much economic activity that is not part of measuredfinancial transactions (such as housekeeping and self-homebuilding), or wherefunding is not availablefor accurate measurements to be made publicly availablefor other economists to use in their studies (including private andinstitutional fraud, in some countries).
Even thoughper-capita GDP as measured can make economic well-being appear smaller than itreally is in some developing countries, the discrepancy could be still biggerin a developed country where people may perform outside of financialtransactions an even higher-value service than housekeeping or homebuilding asgifts or in their own households, such as counseling, lifestylecoaching , a more valuable home décor service, and time management. Even free choicecan be considered to add value to lifestyles without necessarily increasing thefinancial transaction amounts.
More recent theoriesof Human Development have begun to see beyond purely financial measures ofdevelopment, for example with measures such as medical care available,education, equality, and political freedom. One measure used is the Genuine Progress Indicator, which relates strongly to theoriesof distributivejustice. Actual knowledge about what creates growth is largely unproven; howeverrecent advances in econometricsand more accurate measurementsin many countries is creating new knowledge by compensating for the effects ofvariables to determine probable causes out of merely correlational statistics.

Genuine progress indicator
From Wikipedia, thefree encyclopedia

The genuine progress indicator (GPI) is analternative metric system which is an addition to the national system ofaccounts that has been suggested to replace, or supplement, gross domesticproduct (GDP) as a metric of economic growth. The GPI is used in greeneconomics, sustainability and more inclusive types of economics commonly knownas "welfare" economics.[citation needed]

GPI is an attempt tomeasure whether a country's growth, increased production of goods, andexpanding services have actually resulted in the improvement of the welfare (orwell-being) of the people in the country. GPI advocates claim that it can morereliably measure economic progress, as it distinguishes between worthwhilegrowth and uneconomic growth.

The GDP vs the GPI isanalogous to the difference between the gross profit of a company and the netprofit; the Net Profit is the Gross Profit minus the costs incurred.Accordingly, the GPI will be zero if the financial costs of crime and pollutionequal the financial gains in production of goods and services, all otherfactors being constant.