Gnhization of the World

Gunhad Singh Rangar

International Writing Workshop

Professor Bernhardt

Tuesday and Thursday 12:30

Final Draft

December 13 2014

GNHisation of the world

The “Beyond Gross Domestic Product” initiative, as proposed by the European Commission, European Parliament, and the World Wildlife Federation is considered as “clear and appealing as GDP”  but more inclusive of environmental and social aspects of progress. Janez Potočnik, former European Commissioner for the Environment, said, “We need to escape the handcuffs of GDP”. Being a quantitative measure, Gross Domestic Product does not cover any “non-market goods and services” that qualitatively contribute to the well-being of people. In regard, other countries around the world including the United Kingdom, Italy and India, have held conferences through the United Nations to discuss the future of going “Beyond GDP”. UN Secretary-General, Ban Ki-Moon has asserted "We need to move beyond gross domestic product as our main measure of progress, and fashion a sustainable development index that puts people first”. The Telegraph also recently explained how leaning on GDP too heavily has left the world "teetering on the brink of environmental disaster and filled with anger and conflict” while other indicators are emerging to shape the way we evaluate development of a nation.

Measuring a country’s development is considered a useful metric to show the impact of new policies implemented in its economic plan and statistically verify the expansion or contraction during that period. Investors, international organisations, and other parts of the business world use the rankings generated in order to develop financial positions ahead of time. Countries need a universal method to assess development because they have varying economic and governmental structures.

The world has predominantly relied on the growth of gross domestic product, the value added by all production units in a territory, to determine the state of an economy mathematically. The United States Commerce Department’s Bureau of Economic Analysis published a report that showed that the U.S. GDP grew by 4.6 percent in 2014 as opposed to -4.1 percent in the 2009. This is considered a colossal step towards recovering from the recession caused by housing market in 2008, however, does a higher GDP growth rate accurately show how a country has progressed?

According to the Oxford English dictionary, development is defined as “the act or process of growing or causing something to grow or become larger or more advanced”. The controversy presented in the situation revolves around the question of whether GDP is a valid indicator of development and simultaneously examines what we call development in the world today. The Purchasing Managers Index report, which tracks changes in the service sector of the United States economy, has fallen for the fifth consecutive month. In relation to this, Chief Economist of Markit, Chris Williamson, said that the economic recovery has “lost considerable momentum.” The world economy has expanded 3.4 percent this year, rather than the 3.7 percent previously predicted, due to weaker growth in the U.S., Russia and other developing economies. Bank of America Merril Lynch Economist Saul Eslake emphasises that GDP is only one of various summary indicators of overall economic activity provided by the national accounts, however, it is not the least misleading of the various measures (Canberra Times). According to an article by the Wall Street Journal, the rest of the world has already recognised loopholes in the system. Some European countries including the United Kingdom, Ireland and Italy, inflate the size of their economies by including illicit activities such as prostitution and drug dealing while calculating GDP. A higher GDP helps keep their financial debt and fiscal deficits within the prescribed targets set by the European Union. Former Federal Reserve reporter Josh Zumbrun mentions how a rise in GDP additionally makes way for “Bragging rights”. While a growth in GDP can be seen as something to be proud of, the ability to fabricate the GDP of a nation implies that it presents a false picture of an economy. The Senior writer of CNN Money, Jeanne Sahadi proposes “economic growth as measured by gross domestic product doesn't really tell us much about citizens' general well-being.”