Measures of the economic progress: alternatives to GDP
Ekonomikos referatas. Introduction. Genuine Progress Indicator. Gross Sustainable Development Product (GSDP). Index of Sustainable Economic Welfare (ISEW). Human Development Index (HDI). Gross National Happiness (GNH). Conclusion. References.
All human nature is designed for improvement and development. Every country every year is seeking better results than in previous years. The question is how to measure this occurring progress in the most proper way. After the Great Depression the most common measure of economic progress was Gross Domestic Product (GDP). Nowadays it is also widely applied in the economies to measure and compare economic performance during specified periods and many economic, political and scientific decisions are based on this measure. Although as Joaquín Almunia, European Commissioner for Economic and Monetary Policy, mentioned in her speech in the Conference beyond GDP 2007, GDP sometimes is used in adequate way - „Economists have warned since its introduction that GDP is a specialized tool, and treating it as an indicator of general well-being is inaccurate and dangerous”. Gross domestic product is the monetary value of all the finished goods and services produced within a country's borders in a specific time period. It measures overall production within the country but ignores factors such as inflation or social affairs. That is important because the more money is spent in the country not necessary means that country is developing. Finnish economists Mika Maliranta and Niku Määttänen write that the problem of alternative development indexes is their attempt to combine things that are incommensurable. It is hard to say what they exactly indicate and difficult to make decisions based on them. Unfortunately, there is no yet one appropriate measure that covers all indicators.
Taking in mind these arguments in this paper we want to discuss what are the alternatives to measure economic progress and their advantages and disadvantages.