In the coming days, New York will once again become the epicenter of global multilateralism with the United Nations General Assembly and the long-awaited Summit of the Future. This event aims to agree on a “pact for the future” that includes concrete actions to turbocharge the achievement of the Sustainable Development Goals (SDGs) and addressing current global challenges. Among the crucial issues to be addressed is the need to generate new ways of measuring development, overcoming the limitations of the Gross Domestic Product (GDP).
Since the last century, GDP has been used as the universal indicator to measure the development of countries. However, since its adoption, many have pointed out that this index is insufficient, and even counterproductive, to capture the complexity of human progress.
GDP does not consider essential aspects such as human well-being, inequalities or environmental sustainability. In fact, GDP sometimes continues to grow in times of crisis while well-being indicators decline rapidly or stagnate. Likewise, GDP reflects blindly economic impacts, equating activities regardless of whether their impact is positive or negative. For example, activities that erode our environment, such as deforestation or the cost of cleaning up a toxic spill, contribute to GDP in an equivalent way to investments in sustainable infrastructure, education or health. Furthermore, GDP prioritizes the short term over the long term, which is highly problematic at a time when we need a long-term view to address the complex challenges of sustainable development.
Activities that erode our environment, such as deforestation or the cost of cleaning up a toxic spill, contribute to GDP equivalent to investments in sustainable infrastructure, education or health.
Even with these limitations, GDP continues to be used as a benchmark for important national and international policy debates and decisions. In particular, the international financial architecture relies excessively on GDP for decisions essential to sustainable development. Sustainable development requires well-designed, well-implemented, and properly governed and financed long-term public and private investment programmes. However, many decisions on official development assistance, debt relief or financing concessions continue to depend on GDP.
In the current context of multidimensional crises, we have seen how the richest countries and regions have implemented stimulus plans to revive their economies. Many have done so with a green transformation perspective. Developing countries cannot do the same, as they cannot access the capital market on acceptable terms and are mired in extreme debt. In this context, it is impossible to plan the long-term investments necessary to achieve the SDGs. This situation is perfectly illustrated in the Sustainable Development Report 2024 Published by the United Nations Sustainable Development Solutions Network (SDSN), this report shows how the sustainable development performance gap between high-income and low-income countries has widened since 2015, making it more urgent to reform the global financial architecture so that it is “fit for purpose” for sustainable development.
To address these limitations of GDP, several alternative indicators have been proposed, such as the Human Development Index (HDI) and the Multidimensional Poverty Index, the World Happiness Index or the OECD Better Life Index. Although these indices move towards a more comprehensive measurement, none has succeeded in replacing GDP.
More recently, the SDGs and their indicators have provided a comprehensive diagnosis of a country’s state and progress towards a sustainable future. These goals offer a holistic perspective on development, recognizing that human well-being, protection of the planet and economic growth are interdependent goals. Indeed, countries that are at the top of the SDG achievement scale (Finland, Sweden, Denmark) are often ranked at the top of the World Happiness Index (Finland, Denmark, Iceland and Sweden).
It would be ideal to adopt a measurement system for progress that is based on the SDGs as a reference framework focused on people and the environment. In this way, we will be able to evaluate the success of a country not only by its economic growth, but also by its capacity to promote human well-being, equity and resilience to global challenges. This is a major challenge in many ways: on the one hand, convincing arguments must be generated to persuade political leaders to adopt these new metrics; on the other hand, investments are needed to improve statistical capacity and generate rigorous data systems in all countries.
The process of expanding global metrics must be inclusive and involve national statistical institutes, scientists, social experts, and financial institutions that must be involved in its implementation. Although it is a complex process, it will be worthwhile. The Future Summit invites us to imagine a sustainable future and we must accompany these ideas with tools that allow us to assess whether we are on the right path, towards the chosen destination.
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