Dear MEL Topic Readers,
Why Inclusive Wealth Index is a better
measure of societal progress than GDP?
You often hear or see “GDP”. It stands for
Gross Domestic Product, meaning the sum of the output, income, and expenditure
in an economy like a country or region. In short, it is the size of the economy,
but it doesn’t reflect the well-being of the people or problems to the
environment. For example, if you burn more fossil fuels to produce more goods
or buy more things in single-use plastic bags, you’ll gain GDP but cause more
pollution to the environment.
Another word is GDP per capita, which is the
divided GDP by the population of the economy. It shows how wealthy the economy
is on average but doesn’t reflect how much of the wealth is owned by a certain
segment or population of the economy. If only a handful of people own the vast
majority of the wealth and they become richer, GDP per capita also increases
while leaving most of the people in poverty. GDP is like the sales amount
without taking cost or capital into account, so no one knows the bottom line only
from the index.
Are there any better indexes to measure
sustainable economic progress? The UN has adopted a new index called Inclusive
Wealth Index, or IWI, in 2012. It measures more comprehensive wealth taking all
five capitals that are associated with the economy into consideration, financial,
manufactured, human, social and natural. The new index shows the impacts on the
environment and the quality of social welfare and education. Surprisingly,
South Korea marked the highest growth per capita from 1992 to 2012 followed by small
countries like Singapore, Malta, and Latvia.
Though indexes just show the status or changes
from the past. Without actions, they are just numbers.
Enjoy reading the article and learn about the
new wealth index.
No comments:
Post a Comment