Countries Need to Look Beyond GDP

Governments around the world should look beyond the traditional economic indicator of Gross Domestic Product (GDP) when evaluating their success, as it fails to capture the most important aspects of a country's well-being. Former leaders of Iceland and Scotland, who have experienced firsthand the limitations of GDP, argue that people's concerns, such as health, secure housing, adequate income, and time spent with loved ones, should be prioritized.

These factors are the foundation for a decent life, and governments should focus on ensuring they are met before considering GDP as the sole measure of progress.

GDP, while useful for measuring certain goods and services, has been misused in ways its creators never intended, such as rising when forests are destroyed or when financial speculation occurs, but not when parents care for their children or when communities thrive. A new UN Framework called "Beyond GDP" aims to rectify this by providing a set of more meaningful indicators to complement GDP.

Governments must now adopt this framework and use it to set priorities, shape budgets, assess policies, and be held accountable for improving the lives of their citizens.

This shift in focus has already begun in various countries. Iceland, for instance, has introduced 39 wellbeing indicators, including life expectancy, healthcare needs, and work-life balance, to inform policy decisions. In Scotland, a Wellbeing Economy Monitor and a National Performance Framework have been established, guiding policies such as expanding early years education, providing financial support to families, and promoting community wealth building. These efforts demonstrate a move towards a more comprehensive understanding of prosperity.

Similar approaches exist globally, with Bhutan using the Gross National Happiness framework and Malaysia launching a roadmap that prioritizes public health, environmental sustainability, and economic resilience. The concept of "Buen Vivir" from Quechua communities has also been embraced by Ecuador and Bolivia, and New Zealand's wellbeing budget reflects Māori understandings of intergenerational wellbeing. These initiatives are gradually moving from the margins to the mainstream of economic policy.

A new UN report, compiled by a high-level expert group, proposes a dashboard of 31 indicators to supplement GDP, alongside recommendations for various stakeholders on how to implement this agenda. Combined with ongoing efforts to develop a roadmap for eradicating poverty without relying on endless growth, these developments mark significant progress towards a more balanced and sustainable approach to economic growth and development.