Mon, Jan 06, 2020 - Page 7 News List

Can nations prosper by putting well-being before GDP?

Nine experts ranging from national leaders to economists and a Nobel laureate were asked about the idea of going beyond GDP to measure success this year

By Rina Chandran  /  Thomson Reuters Foundation, BANGKOK

Illustration: Yusha

With protests from Chile to Hong Kong last year over widening inequality, violence against women, and climate change, more policymakers and campaigners started to openly debate potential shifts away from an economic model that relies on growth.

New Zealand became the first nation to introduce a “Well-being nudget” that requires all new spending to go to five priority areas, including mental health, child well-being, indigenous people and a low-carbon-emission economy.

The idea of going beyond GDP as the main measure of success is not new.

Bhutan coined the term “gross national happiness” in the 1970s, the Organisation for Economic Co-operation and Development has released an annual well-being index (www.oecdbetterlifeindex.org) since 2011, while the UN’s annual happiness report started in 2012.

However, can nations prosper by putting well-being ahead of GDP this year? The Thomson Reuters Foundation asked nine experts:

“A focus on sustained economic growth has helped raise hundreds of millions of Asians out of poverty over the last few decades. Continued GDP growth will be critical to pulling up the remaining 326 million who still struggle in extreme poverty,” said Abdul Abiad, director of the Asian Development Bank’s Macroeconomic Research Division.

“But developing Asia is now largely middle-income, and people and policymakers are looking beyond progress only in income. An increasing focus on environmental sustainability, liveable cities, holistic health, and fairness and opportunities for all will be a hallmark of economic development in the coming years,” he said.

“It is not an either-or proposition; these are growth sectors that have the potential to drive the region’s GDP,” he added.

Gemma Corrigan, lead, sustantainable markets at the World Economic Forum, said: “In order to create a more equitable and sustainable world, we need to factor into our decisionmaking the consequences of our actions not only for financial and physical capital but for human, social and natural capital. This means measuring the impact of growth on living standards as well as future generations and the environment.”

“We can already do this; the next generation of measurements will also be able to take into account concepts like well-being so that we ensure our economic system is truly aligned with societal goals,” she said.

Katherine Trebeck, policy and knowledge lead at the Wellbeing Economy Alliance, said: “The question of our time is not whether nations can prosper putting well-being ahead of GDP, but how they can possibly continue to put GDP ahead of well-being and expect to prosper.”

“How can they stick to an outdated recipe in the face of evidence that GDP-orientated notions of prosperity are not only harming people and planet, but that the benefits of GDP in terms of social progress tail off after the work of growth is done? How can they refuse to embrace a new agenda, when there are thousands of examples of businesses, cities, communities and politicians who are striving towards a goal not of faster GDP or short-term profit, but returns for people and planet?” she said.

Icelandic Prime Minister Katrin Jakobsdottir said: “The climate crisis underlines the urgent need of thinking beyond GDP while measuring economic success. Prosperity without sustainability is no prosperity. The wellbeing economy initiative demands new thinking, putting people and the planet first. We have no choice but to rethink our economies to tackle the largest crises of our times: climate change and inequality.”

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