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Is GDP The ONLY Way To Measure Progress?

GDP, GDP, GDP. Has India’s GDP gone up, gone down, gone sideways – it’s all you hear about these days. So what is it, why the obsession and are so many column inches and hours of air time justified? 

 Gross Domestic Product (GDP) is the globally accepted measure of a country’s economy using its financial inputs, i.e. the value of final goods and services in a country. And the ratio of GDP to the country’s population determines a mean standard of living. So when the GDP goes up, everyone talks about a country’s progress – and the opposite happens when it goes down.

However,  it’s very one-dimensional in its gauge of progress and cannot provide a genuine snapshot of a country’s overall standard of living or wellbeing. Other methods, such as the Human Development Index, GINI coefficient, Genuine Progress Indicator (GPI), and Gross National Happiness (GNH) Index, have attempted to capture supplementary aspects, but they too have their critics.

GINI doesn’t take into consideration the social safety nets, GNH overlooks gender equality, quality of education, and good infrastructure, and the dimensions used to calculate the GPI are very subjective.

Now There’s SPI

Introduced by the Skoll World Forum in 2012, the Social Progress Index (SPI) has been presented as an innovative and holistic way to make “empirical comparisons of living standards” and quantify societal advancement.

The SPI amasses social and environmental metrics, omitting economic proxies, which directly measure three aspects of social progress outcomes: basic human needs, foundations of wellbeing, and opportunity using 12 key components and 52 indicators, such as individual freedoms, health and wellness, shelter, environmental quality, tolerance and inclusion, access to information and communications, etc.

Can It Improve Public Policy?

One of SPI’s principles is its aim “to be a practical tool that will help leaders and practitioners in government, business, and civil society to implement policies and programmes that will drive faster social progress”. It strives to use its findings that economic development and social progress “are linked but not synonymous” to investigate factors such as culture,  business practices, and government policies, as it watches which countries progress more rapidly on different components of the model.

Paraguay incorporated SPI into its national development framework in 2013, explaining that “old measures of success, like GDP per capita, weren’t getting us where we wanted to go as a country. We needed a way to measure real outcomes for people, not just the level of economic activity …. [So] why not just focus on the end goals themselves?”

As a result, SPI is creating movement for change by instigating Paraguay’s government into improving the conditions of its 120 worst-off villages and informal urban settlements. Since 2013 Paraguay has improved its overall ranking from 72nd (lower middle social progress) to 60th (upper middle social progress) and bettered its basic human needs ranking from 90th to 69th.

How Does India Fare?

After cracking the top 100 in 2016’s SPI, India launched a beta index to better understand its basic social landscape of wellbeing, the effects of local policies on progress, and map the social and environmental needs of cities, districts, and states. Since beginning this evaluation, India’s overall SPI ranking progressed from 98th to 93rd in just one year.

SPI India attributes this progress to the index’s ability to enable policymakers to formulate strategies based on real needs, identify successful practices to scale and emulate, and inform and motivate corporate social responsibility initiatives in the areas where India’s rankings are lowest.

Understanding what the gaps are will not only help the government to improve safety nets and policies, but will also benefit NGOs as they can tailor their programming to address the needs that will have the greatest impact on their beneficiaries overall wellbeing.

Learn more about the work that NGOs are doing here and how you can contribute to making India a better place for all of us to live.

Photo: By Clare Arni

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