THE BLOG
03/18/2016 11:45 am ET Updated Dec 06, 2017

GDP Not Good Enough: The Need for a New Metric for Growth in a Changing World

By Pallavi Roy, member of the St. Gallen Symposium's global Leaders of Tomorrow community

Growth is intrinsic to nature and humans. However, as we continue to consume resources, we push the boundaries of the earth beyond tolerance. This is leading to an environmental challenge with calamitous consequences. The current model of economic growth isn't working as it fails to account for different aspects, such as social and environmental wellbeing.

At present countries measure their economic wellbeing using the gross domestic product (GDP). The advantages of GDP lies in its simplicity, but, it has been raised from a measure of overall economic activity into a metric for our collective well-being. Herein lies the problem, as increasing GDP doesn't mean increasing economic welfare for all. Furthermore, it is quite interesting to note that events such as large oil spills actually increase GDP, while social and environmental impacts are not taken into consideration in the calculations. It also fails to account for externalities not easily measured in the current economic sense; social welfare, environmental and human health protection. This has resulted in the situation worsening for the most vulnerable populations and widening inequality. Hence, the focus today needs to shift from sustained growth to achieving growth for the many.

Some alternates to GDP are:

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One of the models listed above or others proposed in literature might be the solution and promote real and inclusive growth. Still, it won't be widely accepted unless we change mental models and adopt policies that will transform the system. We need to place an equal if not higher value on social and environmental improvement as we place on economic growth. Hence, a systems perspective is required that fosters stewardship of the environment, social progress, and economic prosperity together.

As Dr. Ban Ki Moon has said "Saving our planet, lifting people out of poverty, advancing economic growth... these are one and the same fight. We must connect the dots between climate change, water scarcity, energy shortages, global health, food security and women's empowerment. Solutions to one problem must be solutions for all."

Growth - The good, the bad, and the ugly will be debated in the light of the 46th St. Gallen Symposium (11-13 May 2016).