THE ISSUE: Alternatives would be welcome
IT IS A SYSTEM of measurement that over time has become widely used by the world’s countries. Some people, and indeed some economic stewards are essentially made and broken by it. The system in question is the Gross Domestic Product (GDP), the means by which Barbados and other countries measure their economic growth, and indeed their overall progress in any given year.
So that when Central Bank Governor Dr DeLisle Worrell released the bank’s 2015 economic review showing that the Barbados economy had GDP of 0.5 per cent, some saw this as a sign that the economy hardly grew, while others took it to mean that there were signs of improvement.
Regardless of which side of the issue you stand, though, there is a growing body of opinion internationally that GDP is no longer a good gauge by which to judge a country’s progress or development.
BARBADOS BUSINESS AUTHORITY columnist, University of the West Indies economics lecturer Dr Brian Francis, touched on the issue recently.
Francis defined GDP as “a term used to describe the value of all goods and services produced within the local economy in a given period, usually one year in the case of small open economies like those in the Caribbean because of limited financial and human resources”.
He saw the need for Barbados and the region to “invest some resources” into the implementation of a “new approach” so that “better quality data can be made available to all for policymaking and economic analysis”.
The issue was raised recently at the World Economic Forum in Davos, Switzerland, when three leading economists and academics concluded that “GDP is a poor way of assessing the health of our economies and we urgently need to find a new measure”.
Nobel laureate Joseph Stiglitz said, “GDP in the [United States] has gone up every year except 2009, but most Americans are worse off than they were a third of a century ago. The benefits have gone to the very top. At the bottom, real wages adjusted for today are lower than they were 60 years ago. So this is an economic system that is not working for most people.”
Additionally, MIT professor Erik Brynjolfsson said that as the world change so too should the way progress was measured. “Just as we’re reinventing business, we need to reinvent the way we measure the economy.”
Minister of Finance Chris Sinckler said last year that the region had all of the tools required to come up with anternative measurement to GDP.
Addressing a United Nations meeting, he said, “I would be even more satisfied and elated if within our region we can utilise the experiences we have developed over the decades to work with our developmental institutions . . . to form an appropriately designed, properly resourced and sustainable regional development statistical gateway, in which developmental and economic statistics can be gathered at the click of a button in a central place, to better allow us to not just plan our national agenda, but to map them with what is happening within our region and beyond.”
In August, Prime Minister Freundel Stuart said the Dominica’s devastation by Tropical Storm Erika last year underscored the vulnerability of regional states and was also proof that their GDP could be wiped out within hours.
“I want to . . . impress again on all those who have ears to hear that we must revisit this GDP per capita measure by which countries in CARICOM are graduated and labelled middle income countries,” the CARICOM chairman said.