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This is what GDP is not telling you

Let’s forget about the economy for a moment. What if we ranked countries by people’s wellbeing instead of Gross Domestic Product? The question seems odd as we are used to believe that the two go together, but the Social Progress Index 2015 shows that this is not always true.

Born in 2013, the index measures how countries do in meeting the essential needs of individuals, as well as in creating wellbeing and opportunities to improve people’s lives. It incorporates 52 indicators on nutrition, health, education, environment, safety and personal rights. There are other metrics of this kind, but what makes the Social Progress Index different is that none of the indicators it takes into account are of an economic nature.

So who scores best in these terms? The usual suspects: Norway, Sweden, Switzerland, Iceland, New Zealand, Canada, Finland, Denmark, the Netherlands and Australia. One may argue, this does not do justice to realities that require managing complexity: 7 of the 10 best performers have fewer than 10 million people. But even among these, GDP per capita vary significantly, from $62,448 Norway to $32,808 of New Zealand. Canada is the best performing G7 country, doing better than the US despite a lower GDP per head.

Among countries with a population larger than 100 million, Japan comes first (15th), followed by the United States (16th).

The United Kingdom, where the current election campaign is fought on social welfare and tax benefits, ranks first among the big European countries (11th). Positioned before Germany (14th), Spain (20th), France (21st) and Italy (31st), Britain scores high on freedom of speech and access to advanced education, but low on obesity, air pollution and suicides.

The real surprises, however, are in Central and Latin America, with Uruguay (24th) and Chile (26th) punching above their GDP weight. Costa Rica is a success story, ranking 28th ahead of South Korea and Italy, which have nearly three times its GDP per capita but are poorer in environmental sustainability.

Brazil (42nd) leads the BRICS, followed from distance by South Africa (63rd). In comparison, Russia has a much higher GDP per capita but its social progress performance is much lower (71st). China, the second largest economy in the world, is only 92nd, brought down by the predictable limitations of individual rights, but also by pollution, obesity and number of suicides – the down sides of a breakneck economic development. India is further behind, in the 101st position.

With a low score on basic human needs, 7 of the 10 worst performers are in Africa: Madagascar, Nigeria, Ethiopia, Niger, Angola, Guinea and the Central African Republic. The top country of the continent is Mauritius (36th).

“A striking finding is that GDP is far from being the sole determinant of social progress. Countries must invest in social progress, not just economic institutions, to create the proper foundation for economic growth,” said Harvard Business School Professor Michael E. Porter, who chairs the index’s advisory board.

All together, countries do better on nutrition and medical care, and access to basic knowledge. “These components encompass many of the priorities of the United Nations’ Millennium Development Goals that have been a major focus of aid and development efforts for the past 15 years,” say the experts at the Social Progress Imperative, the US-based organisation publishing the index. Performance, however, is poor on tolerance and inclusion, personal rights and advanced education. Put it another way, the world has started to satisfy basic needs, but has to improve on relations and self-fulfillment.

Another weak area is the environment, where a solution has yet to be found on the growing ecological impacts of increased wellbeing. Even the best countries in terms of social progress score low on ecosystem sustainability.

And what about women? The index does not provide specific information on gender, but indicators such as maternal mortality, gender parity in education, early marriages and access to contraception are included in the framework. “You can’t do well in the index if you score poorly on women’s rights,” told me Michael Green, Executive Director of the Social Progress Imperative.

Similarly, unlike GDP, “a country cannot boost its Social Progress Index score just by improving the lives of the most well off.”

The philosophy of this indicator is to measure “how a country economic success is turned into social progress” as it is now clear that GDP alone is not enough to create a success story. And without much publicity, initiatives to use it are already in place in 40 countries.

Read this article on The Huffington Post.

 

Photo top page: Simon Cunningham, Lending Memo. Photo available under a Creative Commons License.

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