The subject of human development is becoming central to economic management, as concerns are increasing over the pursuit of economic statistics which do not reflect life/standard of living for the majority of a country’s population. The human development or people-centred approach was meant to challenge the economic model which emphasises growth, productivity, GDP and GNP per capita.
Economists like Amartya Sen, Joseph Stiglitz, David Korten, Jeffrey Sachs and Jean-Paul Fitoussi have made strong and empirical justifications why economic development and management should go beyond Gross Domestic Product (GDP) as a measure of economic growth.
These authorities have been clamouring for an alternative development path that makes ordinary people the focus of economic and development policy. To them, economic success depends on committing to an alternative development practice guided by three basic principles of justice: sustainability, participation and inclusiveness. Perhaps Africa’s leaders should take a cue from the emphasis western governments are now putting on development beyond GDP.
In 2008, President Nicolas Sarkozy of France tasked Nobel Prize-winning economists Joseph Stiglitz and Amartya Sen, along with the distinguished French economist Jean Paul Fitoussi, to establish a Commission of leading economists to study whether Gross Domestic Product (GDP) – the most widely-used measure of economic activity – is a reliable indicator of economic and social progress. The Commission was given the further task of laying out an agenda for developing better measures.
After several deliberations, the Commission came out with a concept called ‘Mis-measuring Our Lives’, to serve as a guidepost to anyone engaged in assessing how and whether an economy is serving the needs of the majority population. The authors initially identified the limits of GDP, as a measurement of the well-being of societies—considering, for example, how GDP overlooks economic inequality (with the result that most people can be worse-off even though average income is increasing); and does not factor environmental impacts into economic decisions.
In other words, while GDP is the most well-known and most powerful economic indicator, it can’t tell us everything we need to know about the health of countries and societies. In fact, it can’t even tell us everything we need to know about economic performance.
Therefore, governments need to develop dashboards of indicators that reveal who is benefitting from growth; whether that growth is environmentally sustainable; how people feel about their lives; and what factors contribute to an individual’s or a country’s success.
Environmental protection and sustainability are at the centre of the Sustainable Development Goals. Scientific evidence points to the fact that unsustainable use of natural resources is one of the greatest long-term threats to mankind. In Africa, for instance, the effects of environmental degradation and climate change are already being felt, and are threatening to undo much of the progress already made in eradicating poverty.
In place of GDP, the report introduces a bold new array of concepts – from sustainable measures of economic welfare to measures of savings and wealth, to a ‘green GDP’. Perhaps, at a time when policymakers worldwide are grappling with unprecedented global financial and environmental issues, the report is an essential and timely guide to measuring the things that matter.
How is life?
Similarly, in a recent report titled ‘How’s life in 2017, What makes for a good life?’ the Organisation for Economic Cooperation and Development (OECD) noted that while the richness of human experience cannot be captured in numbers alone, it is important that the statistics shaping public policy reflect both people’s material living conditions and the quality of their lives. This should include how life is changing over time, how lives differ across different population groups, and whether today’s well‑being is achieved at the cost of depleting resources for the future. The report, the fourth in a row, aims at providing a picture of people’s well‑being in OECD and partner countries.
In reviewing the report, Prof. Joseph Stiglitz – a member of the Commission – buttressed the fact that GDP is not a good measure of well-being. “What we measure affects what we do, and if we measure the wrong thing, we will do the wrong thing. If we focus only on material well-being – on, say, the production of goods, rather than on health, education and the environment – we become distorted in the same way that these measures are distorted; we become more materialistic.”
Stiglitz, author of ‘Privatisation and its discontents’, and his most recent one, ‘Globalisation and Its Discontents Revisited: Anti-Globalisation in the Era of Trump’, indicated that the new report highlights several topics, like trust and insecurity; and explains how inadequate metrics have led to deficient policies in many areas. According to him, better metrics would also become an important diagnostic tool – helping countries both identify problems before matters spiral out of control, and selecting the right tools to address them. “Had the US, for example, focused more on health rather than just on GDP, the decline in life-expectancy among those without a college education – and especially among those in America’s deindustrialised regions – would have been apparent years ago,” he pointed out.
Profit over people
In his recent book, Stiglitz argues that Corporate and other special interests always seek to ensure that their interests come first. He says in the United States of America, for instance, the massive corporate tax-cuts enacted by the Trump administration is a clear example of how corporations benefit at the detriment of ordinary taxpayers. “Ordinary people – the dwindling but still vast middle-class – must bear a tax increase, and millions will lose health insurance, to finance a tax cut for billionaires and corporations.” In the case of Ghana and other African countries, companies continue to benefit from huge tax holidays, offshore tax havens, tax evasion and other practices that promote revenue leakage into private pockets (sic).
“If we want to put people first, we have to know what matters to them, what improves their well-being, and how we can supply more of whatever that is. The Beyond GDP measurement agenda will continue to play a critical role in helping us achieve these crucial goals,” he pointed out. Personally, I think this admonition could be useful advice for Ghana’s economic managers and policymakers.
Better life index
Following the report, OECD has constructed a Better Life Index containing a range of metrics which better reflect what constitutes and leads to well-being. Spurred on by Scotland, a small group of countries has now formed the Well-being Economy Alliance. The hope is that governments putting well-being at the centre of their agenda will redirect their budgets which address the most basic needs of the masses – like child protection, childhood poverty-prevention, education; health, water and sanitation, youth skills development, unemployment, women empowerment.
In his seminal work ‘Development as a right’, Amartya Sen argues that poverty is not defined only in terms of living standards, but also lack of choice-capability – meaning a failure to be able to take a full part in human society. In this sense, development means not just GDP and GNP, but restoring or enhancing basic human capabilities and freedoms.
In the 1980s, Amartya Sen’s capability approach emerged as a leading theoretical framework in economics of welfare and development. Developed over time in a series of publications on quality of life, poverty, inequality, Sen argues that human life is a set of ‘beings and doings’ (termed ‘functioning’); and that a person has a range of functioning from which he/she may choose (termed ‘capabilities’). Development can thus expand capabilities and opportunities for people to lead valuable and flourishing lives. According to Sen, attaining this goal largely depends on public action which revolves around human rights, political rights, right to information, participation and access to resources.
In this vein, I beg to differ with the notion of some think-tanks and politicians that the government of Ghana is spending too much on social interventions. I would rather government invested more in social interventions, like free maternal care, water and sanitation, basic education and primary health care. A policy-shift will enable us to overcome years of inequities in the distribution of basic needs.
As stated earlier, the concept of social interventions is in tandem with the people-centred development model. This model emphasises (a) redistribution of wealth, so that the poor have resources to improve their lives; (b) improving education and skills; (c) improving the health of the people; (d) providing the conditions so people can become self-reliant; (e) ensuring that government is accountable to the people and well-managed. In addition, three current issues that have recently emerged as themes for development are: improving the position of women, consideration of the environment, and paying attention to human rights.
Another important aspect of the OECD report is the role of public institutions in promoting or negating inclusive development. The report highlights ways in which people feel distant from the public institutions which serve them. It notes that, currently, there’s a gap between public institutions and the people they serve. The distance grows larger for those who are most under‑represented in public life: people without an upper secondary education are less likely to feel that they have a say in policy decisions, compared to those with a tertiary education.
Corruption ranked high among citizen complaints about institutional failure. More than half of OECD residents consider corruption to be widespread in their government. It says trust in public institutions has fallen since 2005, and only 33% of people feel they have a say in what their government does.
In previous articles, I emphasised severally that public institutions play a central role in not just promoting economic growth, but also in ordering the realities of our lives. Public institutions can, and often do, determine which government policy succeeds and which fails; which citizens get what and which do not get; which region gets what development, and which doesn’t.
Institutions and their impact on inclusive development border on the culture of every nation. In fact, there are few things that are as powerful as culture – the way we think, the way we do things, how we market ourselves etc. UNESCO argues that placing culture at the heart of our strategies is both the condition for enabling sustainable development and a powerful driving factor for its achievement.
The approach of UNESCO is firmly grounded on this principle that culture is the fountain of our progress. Human rights include many very important cultural rights which should be given equal attention, such as the right to participate in political, social and economic activity of one’s country etc.
Thus, respecting and promoting cultural diversity within a human rights-based approach prevents conflicts and protects the rights of marginalised groups within and between nations, and creates optimal conditions for achieving development goals beyond GDP.
OECD (2017), How’s Life? 2017: Measuring Well-being, OECD Publishing.
Sen, A. (1990b) ‘Development as capability expansion’, in Griffin, K and Knight, J. (eds.) Human Development and the International Strategy for the 1990s, MacMillan, London
Stiglitz, J. E. (2018) “Beyond GDP”, Project Syndicate
(***The writer is a Development and Communications management Specialist, and a Social Justice Campaigner. All views expressed in this article are my personal views and do not represent those of any organisation(s). (Email: Mobile: 0243327586/0264327586)