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Imputing Away the Ladder: Implications of Changes in GDP Measurement for Convergence Debates and the Political Economy of Development
Abstract
What are the implications of changes in measurement standards of GDP for global convergence debates? What are the political economy implications? To answer the former question, we examine the changes in national accounting standards from the early 1990s. Revisions to the System of National Accounts (SNA) – the international standard for constructing GDP – include several major changes to how production is measured, including the reclassification of financial intermediation services, R&D, and weapons systems as productive activities – all areas in which countries in the West has had an advantage in recent decades. In addition, there has been an increase in the proportion of imputations in the 1993 and 2008 revisions, which privileges the economic structures of the West. Overall, we find that these changes have had the effect of boosting the GDP of the West relative to the rest of the world and thus to an underestimation of global convergence compared to previous measures of GDP. To answer the second question, the paper unpacks the political economy implications of national accounting standards favouring Western economies along several axes, including the impacts on voting shares in international institutions, domestic policy incentives and epistemological debates about sustainable development.
... The dataset is available for download as supplementary material. 4 Assa and Kvangraven (2021) summarize the issues prevalent in the conventional SNA as a measure of development. ...
... This is closely related to our concept of unproductive activity. See Assa and Kvangraven (2021) for cross-country evidence on value added without accounting for such imputed activities. ...
The paper analyzes cross-country economic development from a Marxist perspective. We develop a new methodology and a panel of Marxist variables for 43 countries using world input-output data from 2000 to 2014. Our new dataset provides estimates of a wide range of variables within and across countries including profit rates, exploitation rates, composition of capital, knowledge rents, shares of productive activity, and country weights in the global aggregates. Contrary to Marx's hypothesis, we find that exploitation rates and the organic composition of capital (his measure of capital intensity) vary inversely with development levels, indicating that income differences between countries are larger than class-based inequality within countries. Profit rates on productive activity do not change with economic development. The average profit rate on total capital does decline with the level of development but for a different reason than Marx expected: the rise of the capital stock tied up in unproductive activity. Unproductive activity and knowledge rents both increase with the level of development. Productive activity has moved rapidly towards China and away from the USA, Japan, and Germany. The rise of China kept the wage share of value added constant at the global level. The USA have the highest shares of the global income of unproductive activity and knowledge rents. In favor of Marx's hypothesis, we find that the world profit rate declined because the organic composition of capital increased faster than the rate of exploitation.
... Although there have already been efforts made in the past to improve the SNA and make it more inclusive of activities that are particularly relevant for countries in the Global South (such as informal sector work and certain forms of unpaid work such as water collection), evidence suggests that SNA reforms continue to favour higher-income countries and their economies. 191 This lends weight to the argument of academics who support beyond GDP approaches, who advocate for a more comprehensive revision of the SNA -by including views from economic, social and natural scientists to forge an interdisciplinary perspective on accounting and evaluation. 192 There are reports that those working on the SNA revision are making progress towards including indicators related to social prosperity, sustainability and equity, but are struggling with how to incorporate 'non-market phenomena such as unpaid household work/care or environmental damages' 193 and 'challenges surrounding the valuation of non-market outputs in a manner consistent with SNA valuation principles.' ...
There is growing consensus among many policymakers, institutions and movements that gross domestic product (GDP) is not fit for purpose as the pre-eminent economic metric. Alternatives are urgently needed to facilitate the transition to a new economic model that supports a radically more equal, kinder, greener and feminist world in the present, while offering redress for historical damage and inequalities. However, despite growing experimentation, most efforts are insufficiently bold and remain mostly on paper, with only a few notable but relatively small-scale and still-developing exceptions. To dismantle GDP, different social movements will need to coalesce around key metrics that prioritize far greater equality, and align with feminist and decolonial values while challenging the systems of power and narratives that are holding GDP in its dominant place. Only in this way are alternatives likely to deliver the economic transformation needed to put people and planet first. Butt, A.P., Berkhout, E., Zaghbour, C.M., Bush, A., Verma, R., Pheko, L.L. (2023). Radical Pathways Beyond GDP: Why and How We Need to Pursue Feminist and Decolonial Alternatives Urgently, London: Oxfam.
... 70 This trend continues in spite of the huge public stimuli offered in the guise of quantitative easing, "green" subsidies or, more recently, COVID-19 recovery funding, and in spite even of the "creative" accounting used to inflate GDP growth by altering the method of calculating economic output. 71 In such context where the prime objective of capitalism not only is under attack, but also does not seem to materialise, it may prove impossible for corporate purpose to reincarnate into something socially useful or even desirable. It matters little if this is because it cannot accommodate environmentalism or because insufficient wealth is produced. ...
This article examines and critiques the most widely used measure of productivity (output per worker employed) and argues that this is a flawed, inadequate, and even misleading measure of economic progress. In terms of cross-country comparisons and assessing trends over time, both the numerator (GDP or value added) and the denominator (number of workers or hours worked) have significant conceptual and measurement problems. These issues are considered both in general and regarding how they affect analyses of productivity differentials in the United States and India in the recent period.
JEL Classification: B5, O47, E24
This paper reviews statistical conundrums associated with technological and structural change in view of recent debates over secular stagnation, and suggests a pragmatic approach to economic policy, geared toward living standards and security, in an era of irreversible globalization and a dominant role for services in employment.
Marx and many of his less radical contemporary reformers saw the historical role of industrial capitalism as being to clear away the legacy of feudalism—the landlords, bankers, and monopolists extracting economic rent without producing real value. However, that reform movement failed. Today, the finance, insurance, and real estate (FIRE) sector has regained control of government, creating neo-rentier economies. The aim of this postindustrial finance capitalism is the opposite of industrial capitalism as known to nineteenth-century economists: it seeks wealth primarily through the extraction of economic rent, not industrial capital formation. Tax favoritism for real estate, privatization of oil and mineral extraction, and banking and infrastructure monopolies add to the cost of living and doing business. Labor is increasingly exploited by bank debt, student debt, and credit card debt while housing and other prices are inflated on credit, leaving less income to spend on goods and services as economies suffer debt deflation. Today’s new Cold War is a fight to internationalize this rentier capitalism by globally privatizing and financializing transportation, education, health care, prisons and policing, the post office and communications, and other sectors that formerly were kept in the public domain. In Western economies, such privatizations have reversed the drive of industrial capitalism. In addition to monopoly prices for privatized services, financial managers are cannibalizing industry by leveraging debt and high-dividend payouts to increase stock prices.
JEL Classification: B26, N20, B51
Macroeconomic statistics simultaneously shape and try to capture the political economy we study. Their biases mold social and political dynamics; they also infect academic and policy analysis. Political economy can both benefit from and advance an understanding of economic statistics as political artefacts. To help unlock that potential , this article builds on scholarship dispersed across disciplines and highlights three points. First, a binary debate that either acclaims or vilifies economic data is misdirected. Indispensable for public policy, quantification is neither good nor bad per se; the question is what its specific ramifications are. Second, macroeconomic statistics have been built around an ideal of white male factory work for wages. The further economic activity is removed from that image, the more statistics misrepresent or ignore it, with systematic biases as a result. Third, the real-world impact of statistics always depends on how they are understood, used, and subverted. It hinges on statistical practices, not just on abstract measurement approaches. As political economists we are political agents when we define, and reproduce, our object of study. We face both an analytical and a normative imperative to work with and towards statistics that do justice to the world and the people in it.
We examine the record of crosscountry growth over the past 50 years and ask if developing countries have made progress on closing income gap between their per capita incomes and those in the advanced economies. We conclude that, as a group, they have not and then survey the literature on absolute convergence with particular emphasis on that from the last decade or so. That literature supports our conclusion of a lack of progress in closing the income gap between countries. We close with a brief examination of the recent literature on cross-individual distribution of income which finds that, despite the lack of progress on cross country convergence, global inequality has tended to fall since 2000. (JEL E01, E13, O11, O47, F41, F62)
The expansion of middle-income countries in the global South is now widely acknowledged as significant for international development research and practice. But, as yet, scholars have not fully considered how middle-income countries are responding to the new global goals on international development (the Sustainable Development Goals-SDGs) outlined in Agenda 2030. Equally, insufficient attention has been paid to how-if at all-the SDGs shape domestic development policies and practices in middle income countries. We ask these questions in Ecuador, a country that recently moved from being a lower middle-income and donor dependent country to a more autonomous higher middle-income country with the capacity to promote its own national domestic development approach, Buen Vivir (in English: living well). Deploying a qualitative case study methodology and drawing primarily on in-depth semi-structured interviews conducted with policy makers working in Ecuador's national government and in the capital Quito, we show that policy makers' engagement with the SDGs is selective, with an emphasis on those goals and targets which are considered of domestic importance. Both the national government and Quito's local government are currently focussing mainly on SDGs 10.2 (breaking inequalities) and 11 (inclusive cities). We demonstrate that, in practice, how policy makers understand implementation of these ''priority" goals is not consistent; it depends on political preferences, where policy makers are located in the architecture of decentralised governance and the context-specific challenges they face. Evidence from Ecuador suggests that the SDGs cannot be understood as a single coherent template for development that states will simply adopt. Rather they should be analysed in the context of a rapidly changing architecture of global power, shaped by the context-specific nature of national development challenges and national political structures, including decentralisation.
The global financial crisis is usually seen as a failure of neoclassical economic theory and
neoliberal policy, but it also represented an epistemological failure. Forecasters who missed the crisis neglected to include the financial sector in their models, while aggregate indicators such as GDP failed in spite (or perhaps because) of their heavy emphasis on financially driven growth. In contrast to both critics and proponents of GDP who see it as a purely statistical measure, this article argues that GDP is in fact a form of numerical rhetoric. Political messages in such estimates were explicit until the early twentieth century, but have since become implicit in hidden assumptions. To uncover the narratives built-in to GDP’s view of finance, the article conducts a thought-experiment comparing GDP with two counterfactual indicators corresponding to historical views of finance as either non-productive or an actual cost to society. The analysis shows how changing this single assumption leads to very different narratives regarding the class-balance of workers vs. capitalists, the relative importance of consumption, and the extent of space that exists for public policy to influence the economy. The article concludes with some thoughts on making the implicit assumptions in GDP explicit, and opening up the debate to the broader public in a transparent way.
This paper reviews catch-up growth in various parts of the world, especially in the twentieth century, with a particular focus on what this implies for the Global South. In 1950, US per capita national income, adjusted for purchasing power, was nearly five times the world average. Since then, Western Europe and Japan have closed their per capita income gaps with the USA. East Asia, South Asia and some other developing countries have also started to close their gaps with the West in recent decades. Thus, after well over a century of growing international economic disparities or divergence, the world has witnessed an era of uneven catching up with the North in parts of the South since the mid-twentieth century. © The Author(s) 2017. Published by Oxford University Press on behalf of the Cambridge Political Economy Society. All rights reserved.
In the over 25 years since Jorgenson and Fraumeni (1989) published their first article integrating human capital measures with the national accounts, the Bureau of Economic Analysis's (BEA's) U.S. National Income and Product Accounts (NIPAs) and U.S demographics have changed significantly. The original paper is a national income accounting paper with production and factor outlay, income, receipt and expenditure, capital accumulation, and wealth accounts in current and constant prices. In this paper, we update the Jorgenson-Fraumeni human capital estimates and integrate them into the latest NIPA accounts. A comparison of the aggregates for the U.S. and their trends between the earlier 1949–19 period and later 1998–2009 period is informative. The benefit from integrating human capital components into BEA's NIPA over a long historical time period allows us to quantify the impact of the end to the gains in average educational attainment, changes in female labor force participation, and the possible impact of the greying of America.
The persistently large income gap between the Developed Countries (DCs) of the North and relativelyLess Developed and Developing Countries (LDDCs) of the South is one of the most notable features ofthe international community over the last few decades. Such large disparities in income are paralleledby huge gaps in other non-monetary indicators of well being. Different research works in this field haveindicated that the average annual growth rate of per capita income in LDDCs has been faster comparedto that in DCs particularly since early 1990s indicating a sign of convergence in the growth process.However, the absolute gap between the DCs and LDDCs in terms of per capita GNP has widened overyears. In this chapter, an attempt has been made to indicate the pattern of ß-convergence and s- convergencein income growth between DCs and LDDCs during 1960-2012. The study observes that thereremains a definite indication of ß and s convergence in the growth rate of real PCI across different groupsof nations particularly during the period 2000-2013.
We propose a summary statistic for the economic well-being of people in a country. Our measure incorporates consumption, leisure, mortality, and inequality, first for a narrow set of countries using detailed micro data, and then more broadly using multi-country datasets. While welfare is highly correlated with GDP per capita, deviations are often large. Western Europe looks considerably closer to the United States, emerging Asia has not caught up as much, and many developing countries are further behind. Each component we introduce plays a significant role in accounting for these differences, with mortality being most important. (JEL D63,.
Macroeconomic indicators – especially inflation, gross domestic product growth, public deficits and unemployment – stand central in economic governance. Policy-makers use them to assess their economies’ health. Citizens evaluate politicians’ performance using them as yardsticks. But these indicators defy simple definition, and the formulae underlying them have varied across countries and over time. Particular choices have fundamental distributive consequences. This research agenda outlines how we might study macroeconomic indicators as powerful ideas and ask: why do we measure the economy the way we do? It illustrates the myriad ways in which macroeconomic indicators are embedded in contemporary social and political life, and it outlines how we can uncover both what power rests in these indicators and who has power over them. After path-breaking scholarship has demonstrated how consequential these indicators are, it is imperative to understand better which forces determine our choice for one indicator formula over its alternatives.
Gross domestic product is arguably the best-known statistic in the contemporary world, and certainly amongst the most powerful. It drives government policy and sets priorities in a variety of vital social fields - from schooling to healthcare. Yet for perhaps the first time since it was invented in the 1930s, this popular icon of economic growth has come to be regarded by a wide range of people as a ‘problem’. After all, does our quality of life really improve when our economy grows 2 or 3 per cent? Can we continue to sacrifice the environment to safeguard a vision of the world based on the illusion of infinite economic growth?
Lorenzo Fioramonti takes apart the ‘content’ of GDP - what it measures, what it doesn‘t and why - and reveals the powerful political interests that have allowed it to dominate today's economies. In doing so, he demonstrates just how little relevance GDP has to moral principles such as equity, social justice and redistribution, and shows that an alternative is possible, as evinced by the ‘de-growth’ movement and initiatives such as transition towns.
A startling insight into the politics of a number that has come to dominate our everyday lives.
This talk examines the popular idea that economic growth can continue indefinitely in post-industrial capitalist economies through the shift of labor to service sectors, particularly finance and information-based activities, in the light of the classical-Marxian theory of value and the related categories of productive and unproductive labor. As the generally accepted classical theory of land rent exemplifies, many types of income in capitalist economies, including interest, financial fees, speculative trading profits, and intellectual property royalties, arise as parts of the surplus value generated by the exploitation of productive labor appropriated through the assertion of various property rights. The dramatic phenomena of highly profitable business models based on network externalities associated with the internet and other information-based technologies do not represent new modes of value production, but modes (in some cases not particularly new) of participation in the pool of surplus value. National income accounting conventions that impute a fictitious output as a counterpart to incomes generated in sectors such as finance, professional and business services, education and health, and government, where there are no market-based measures of output create a distorted and misleading picture of value production and growth in advanced capitalist economies. A clear understanding of the origin of value in the expenditure of productive labor and of surplus value in the exploitation of productive labor is essential to thinking through the problems of post-industrial capitalist growth, distribution, resource conservation, and environmental protection.
It has become widely accepted that focusing exclusively on income growth may lead to a too narrow-sighted measure of changes in well-being. People care about other dimensions of life, such as their health, employment, social interactions and personal safety. Moreover, an exclusive focus on income growth remains blind to the distribution of income and well-being in the society. We propose therefore a set of five principles for a richer measure of well-being. In particular, we advocate the use of a measure based on “equivalent incomes”, which satisfies these principles. We discuss and illustrate how this equivalent income approach can be implemented in Europe, using the ESS data for 2008 and 2010. We find that introducing inequality aversion and including other dimensions in the analysis leads to a remarkably different perspective on the growth of well-being in Europe.
This article investigates the changing relationship between employment and real output in the US economy from 1948 to 2010 at the aggregate level and at some major industry grouping levels of disaggregation. Real output is conventionally measured as value added corrected for price inflation, but there are some industries in which no independent measure of value added is possible and existing statistics depend on imputing value added to equal income. Indexes of output that exclude these imputations are closely correlated with employment over the whole period and remain more closely correlated during the current business cycle. This analysis offers insights into deeper structural changes that have taken place in the US economy over the past few decades in a context marked by the following three factors: (i) the service (especially the financial) sector has grown in importance, (ii) the economy has become more globalised, and (iii) the policy orientation has increasingly become neo-liberal. We demonstrate an economically significant reduction in the coefficient relating employment growth to output growth over the business cycles since 1985. Some of this change is due to sectoral shifts towards services, but an important part of it reflects a reduction in the coefficient for the goods and material value-adding sectors. © The Author 2013. Published by Oxford University Press on behalf of the Cambridge Political Economy Society. All rights reserved.
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Widely used since the mid-twentieth century, GDP (gross domestic product) has become the world’s most powerful statistical indicator of national development and progress. Practically all governments adhere to the idea that GDP growth is a primary economic target, and while criticism of this measure has grown, neither its champions nor its detractors deny its central importance in our political culture. In The Power of a Single Number, Philipp Lepenies recounts the lively history of GDP’s political acceptance—and eventual dominance. Locating the origins of GDP measurements in Renaissance England, Lepenies explores the social and political factors that originally hindered its use. It was not until the early 1900s that an ingenuous lone-wolf economist revived and honed GDP’s statistical approach. These ideas were then extended by John Maynard Keynes, and a more focused study of national income was born. American economists furthered this work by emphasizing GDP’s ties to social well-being, setting the stage for its ascent. GDP finally achieved its singular status during World War II, assuming the importance it retains today. Lepenies’s absorbing account helps us understand the personalities and popular events that propelled GDP to supremacy and clarifies current debates over the wisdom of the number’s rule.
When the Human Development Index (HDI) was introduced in the 1990s, it was an important step toward a more sensible measure of progress, one defined less by GDP growth and more by social goals. But the limitations of HDI have become clear in the 21 st century, given a growing crisis of climate change and ecological breakdown. HDI pays no attention to ecology, and retains an emphasis on high levels of income that-given strong correlations between income and ecological impact-violates sustainability principles. The countries that score highest on the HDI also contribute most, in per capita terms, to climate change and other forms of ecological breakdown. In this sense, HDI promotes a model of development that is empirically incompatible with ecological stability, and impossible to universalize. In this paper I propose an alternative index that corrects for these problems: the Sustainable Development Index (SDI). The SDI retains the base formula of the HDI but places a sufficiency threshold on per capita income, and divides by two key indicators of ecological impact: CO2 emissions and material footprint, both calculated in per capita consumption-based terms and rendered vis-à-vis planetary boundaries. The SDI is an indicator of strong sustainability that measures nations' ecological efficiency in delivering human development.
In one lifetime, GDP, or Gross Domestic Product, has ballooned from a narrow economic tool into a global article of faith. As The Little Big Number demonstrates, this spells trouble. While economies and cultures measure their performance by it, GDP only measures output. It ignores central facts such as quality, costs, or purpose. Sustainability and quality of life are overlooked. Losses don't count. The world can no longer afford GDP rule―GDP ignores real development. Dirk Philipsen demonstrates how the history of GDP reveals unique opportunities to fashion smarter goals and measures. The Little Big Number explores a possible roadmap for a future that advances quality of life rather than indiscriminate growth.
Over the last decade, international rankings have emerged as a critical tool used by international actors engaged in global governance. State practices and performance are now judged by a number of high-profile indices, including assessments of their levels of corruption, quality of democracy, creditworthiness, media freedom, and business environment. However, these rankings always carry value judgments, methodological choices, and implicit political agendas. This volume expertly addresses the important analytical, normative, and policy issues associated with the contemporary practice of 'grading states'. The chapters explore how rankings affect our perceptions of state performance, how states react to being ranked, why some rankings exert more global influence than others, and how states have come to strategize and respond to these public judgments. The book also critically examines how treating state rankings like popular consumer choice indices may actually lead policymakers to internalize questionable normative assumptions and lead to poorer, not improved, public policy outcomes.
This paper sets out a framework for analyzing the impact of public investments on industry-level productivity and economic growth. The concept of capital in the public sector is broadened from that which is mostly tangible (e.g. physical infrastructure) to that which also includes intangibles and long-lasting societal assets. For the analysis of public investments, we find that in addition to expanding the asset boundary, national accounts also need to: (a) impute a net return to government and other non-market capital—or provide industry-level data by institutional sector of origin, allowing researchers to do so; (b) include all public payments to industry in industry-level gross operating surplus (i.e. all subsidies, production, and product, and the annuity value of investment grants); and (c) provide crosswalks for key components of government expenditure by function of government (e.g. public funds for extramural R&D or worker training) to kind-of-activity classifications used for industries.
Gross Domestic Product (GDP) and other statistics based on national income accounting are ubiquitous but rarely understood today. GDP has been criticized for many reasons, including not reflecting well-being, leaving out the costs of environmental pollution, and not counting unpaid work, but on purely economic terms it has been mostly accepted as an indicator of economic performance. In recent decades, however, GDP has diverged dramatically from economic trends such as employment and median income. This book argues that GDP is flawed even as a narrow economic indicator, and traces the problem to the way financial services are measured. The first part of the book is a political history of the practice of national accounting from its beginning in the mid-17th century to present day, and explores how such income estimates were constructed for political reasons. The Financialization of GDP presents the practice of estimating national income as a historically and political contingent craft - driven by power and not only theory - culminating in the rise of the financial sector and the concomitant inclusion of financial services in GDP in 1993. The second part of the book focuses on the treatment of financial services in national accounting and develops an adjusted measure of output (Final Domestic Product or FDP) - which treats financial revenues as intermediate inputs (or costs) to the economy as a whole. The final part of the book explores the empirical and policy implications of treating finance as an overall cost to the economy. This volume shows that the Great Moderation of volatility was a statistical artefact; Okun’s Law (relating changes in output and unemployment) never died, and even provides early signs for the Great Recession which analysts using standard GDP did not see. This book is of great interest to those who study political economy and macroeconomics.
The problems involved in estimating real output that I discuss in this paper cause the official government statistics to underestimate of the rates of growth of real GDP, real personal income, and productivity. That underestimation is important not just to economists trying to understand where the economy is going but also to the broader public and to the political system. The understatement of real growth reflects the enormous difficulty of dealing with quality change and the even greater difficulty of measuring the value created by the introduction of new goods and services. Despite the vast amount of attention that has been devoted to this subject in the economic literature and by the government agencies, there remains insufficient understanding of just how imperfect the official estimates actually are. It is important for economists to recognize the limits of our knowledge and to adjust public statements and policies to what we can know. This paper is not about the recent slowdown in measured productivity but that subject is discussed briefly.
With antecedents as far back as the late 17th century, national accounting is a product of the Great Depression, the Second World War and the subsequent period of recovery and economic growth. Soon after the war, country experiences and international harmonization processes interacted, eventually leading to a complete accounting framework with the 1993 SNA/ESA 1995. Until the mid-1970s, national accounting experienced a kind of golden age, after which greater difficulties arose, in terms of the increased complexity of economic life, widened social concerns and theoretical challenges. In that context, impressive achievements and a sense of frustration have coexisted.
Recent decades have seen a flurry of new indicators to measure economic progress, but none of them has succeeded in replacing GDP. This article seeks to explain this outcome and to contribute to the debate about composite indicators versus a dashboard approach. To this end, it reviews some of the most popular alternatives to GDP (the Human Development Index, the Genuine Progress Indicator, the Happy Planet Index, and an environmentally corrected GDP), focusing on their conceptual foundations rather than on their statistical consistency as most of the literature does. It is shown that most of these measures are theoretically inconsistent; the exception is the environmentally corrected GDP, but since this too has failed to replace GDP, inconsistency must be only one reason behind the limited use of alternative measures. The author argues that the main reason for GDP's primacy is that GDP is better suited to reflect the goals of capitalist market economies. This implies that constructing composite indicators as alternatives to GDP will be pointless as long as the current preference system has not changed to include environmental or social goals. The author also suggests that for this purpose a dashboard approach, which provides different social groups with intelligible quantitative instruments, may be preferable to the use of composite indicators.
This manual explains what GDP and GNI and their components are and what they mean. It shows how they are used and what they are used for. And it does this in an easily understood way. Opening with a chapter showing how national accounts concepts relate to macroeconomics, the books goes on to systematically deal with volume and prices, international comparability, production, final uses, household accounts, business accounts, government accounts, and financial accounts. It also has chapter on how national accounts data are gathered and the history of the national accounts system. Three special chapters examine national accounts in China, India, and the United States. Previously published only in French, this manual has been revised and expanded to have a truly global perspective.
The use of indicators as a technique of global governance is increasing rapidly. Major examples include the World Bank's Doing Business Indicators, the World Bank's Good Governance and Rule of Law indicators, the Millennium Development Goals, and the indicators produced by Transparency International. Human rights indicators are being developed in the UN and regional and advocacy organizations. The burgeoning production and use of indicators has not, however, been accompanied by systematic comparative study of, or reflection on, the implications, possibilities, and pitfalls of this practice. This book furthers the study of these issues by examining the production and history of indicators, as well as relationships between the producers, users, subjects, and audiences of indicators. It also explores the creation, use, and effects of indicators as forms of knowledge and as mechanisms of making and implementing decisions in global governance. Using insights from case studies, empirical work, and theoretical approaches from several disciplines, the book identifies legal, policy, and normative implications of the production and use of indicators as a tool of global governance.
Why did the size of the U.S. economy increase by 3 percent on one day in mid-2013-or Ghana's balloon by 60 percent overnight in 2010? Why did the U.K. financial industry show its fastest expansion ever at the end of 2008-just as the world's financial system went into meltdown? And why was Greece's chief statistician charged with treason in 2013 for apparently doing nothing more than trying to accurately report the size of his country's economy? The answers to all these questions lie in the way we define and measure national economies around the world: Gross Domestic Product. This entertaining and informative book tells the story of GDP, making sense of a statistic that appears constantly in the news, business, and politics, and that seems to rule our lives-but that hardly anyone actually understands. Diane Coyle traces the history of this artificial, abstract, complex, but exceedingly important statistic from its eighteenth- and nineteenth-century precursors through its invention in the 1940s and its postwar golden age, and then through the Great Crash up to today. The reader learns why this standard measure of the size of a country's economy was invented, how it has changed over the decades, and what its strengths and weaknesses are. The book explains why even small changes in GDP can decide elections, influence major political decisions, and determine whether countries can keep borrowing or be thrown into recession. The book ends by making the case that GDP was a good measure for the twentieth century but is increasingly inappropriate for a twenty-first-century economy driven by innovation, services, and intangible goods.
Received histories present national accounts as universal, purely economic measures based mostly on theoretical foundations. This paper argues that this is an anachronistic approach to the long and uneven development of these estimates and builds on geopolitical economy to examine national income estimates as quantifications of state power. First, it reveals national income accounts to be historically and geographically contingent rather than universal, suggesting contestation instead of any hegemony or dominance of one central ideology. Second, the economic power and motivations of nation-states, rather than economic theory, are at the core of the design of national income estimates, which are used to promote states' position in international competition as well as advocate for particular national economic policies. The history of national accounting closely tracks the rise of the nation-state, the unique phase of British hegemony, the two World Wars, the east-west competition of the Cold War, and the north-south competition of the recent two decades. To this day, revisions to national accounting systems reflect the shifting balance of power and incessant international competition.
ON 5N OVEMBER 2010, GHANA STATISTICAL SERVICES announced that it was revising the GDP estimates upwards by over 60 percent, suggesting that in previous GDP estimates economic activities worth about US$13 billion had been missed. After the revision a range of new activities were accounted for, and as a result Ghana was suddenly upgraded from a lowincome country to a lower-middle-income country. In the fall of 2011 Nigeria also announced a forthcoming upward revision of its GDP. Without presenting the public with any facts or figures, nor a date for the revision, it was announced by the director of the Nigerian Bureau of Statistics that Nigeria soon would join Ghana in escaping poverty according to official statistics. This briefing first traces how the development community reacted to the news of the upward revision, before clarifying why Ghana became a lower-middle-income country overnight. It is very tempting to assume that this process was the result of tampering with numbers to gain political advantage, but I show that the upward revision did have a factual grounding and that it was done according to the book. The acknowledgement that the revision was undertaken according to the rules is actually more startling than if this was just sheer political manipulation of numbers, as it highlights the discrepancy between economic realities and the statistical metrics used to express and analyse wealth and poverty. The consequences for the comparisons of development across time and space in sub-Saharan Africa are mind-boggling, and the briefing considers the implications and likelihood of such revisions beyond Nigeria and Ghana. Finally, the briefing reassesses the production of development statistics in sub-Saharan Africa in the light of these game-changing revisions.
I. Introduction, 65. — II. A model of long-run growth, 66. — III. Possible growth patterns, 68. — IV. Examples, 73. — V. Behavior
of interest and wage rates, 78. — VI. Extensions, 85. — VII. Qualifications, 91.
Good data, Michael Ward argues, serve to enhance a perception about life as well as to deepen an understanding of reality. This history of the UN's role in fostering international statistics in the postwar period demonstrates how statistics have shaped our understanding of the world. Drawing on well over 40 years of experience working as a statistician and economist in more than two dozen countries around the world, Ward traces the evolution of statistical ideas and how they have responded to the needs of policy while unraveling the question of why certain data were considered important and why other data and concerns were not. The book explores the economic, social, and environmental dimensions of the UN's statistical work and how each dimension has provided opportunities for describing the well-being of the world community. Quantifying the World also reveals some of the missed opportunities for pursuing alternative models. © 2004 by United Nations Intellectual History Project. All rights reserved.
This paper sheds light on two problems in the Penn World Table (PWT) GDP estimates. First, we show that these estimates vary substantially across different versions of the PWT despite being derived from very similar underlying data and using almost identical methodologies; that the methodology deployed to estimate growth rates leads to systematic variability, which is greater: at higher data frequencies, for smaller countries, and the farther the estimate from the benchmark year. Moreover, this variability matters for the cross-country growth literature. While growth studies that use low frequency data remain robust to data revisions, studies that use annual data are less robust. Second, the PWT methodology leads to GDP estimates that are not valued at purchasing power parity (PPP) prices. This is surprising because the raison d’être of the PWT is to adjust national estimates of GDP by valuing output at common international (purchasing power parity [PPP]) prices so that the resulting PPP-adjusted estimates of GDP are comparable across countries. We propose an approach to address these two problems of variability and valuation.
Is the United States really losing power to developing countries, even China? This political scientist says the West's power, led by the United States, is still preeminent. He presents five case studies to make his point.
Ever since the publication of the Stiglitz Report, France has been heavily involved in the measurement of well-being. The French Statistical Institute (INSEE) has expanded the scope of its existing surveys. It has also launched an innovative experimental survey which, drawing upon a single statistical source, aims for the first time to explore the different dimensions of both objective and subjective quality of life, as highlighted in the Stiglitz Report. It allows us to study, at the individual level, correlations between these dimensions and the accumulation of deprivations. It has enabled us to better understand the links between determinants generally referred to as objective dimensions of quality of life (such as health or education) and subjective well-being. This information is of paramount importance for policy makers who cannot act directly on the level of people's satisfaction but can only act upon the levers of objective dimensions. This paper presents the main findings of the experimental survey.
This study examines how numbers in transnational governance constitute actors, objects, and relationships, including relationships of power. We review the existing literatures on numbers for insights relevant to their role in transnational governance, including the ontology of numbers, the history of numbers and their role in governance. On this basis, we set out the main distinctive ways that numbers are implicated in transnational governance. We conclude that studies of transnational governance would benefit from paying more attention to the much overlooked performative role of numbers in governance processes. Numbers have properties that differ from words, and shifts from one to the other in governance, for instance in the displacement of laws or norms with risk models or rankings based on numbers, have particular effects, including political effects on states, firms, individuals, and other actors and institutions.
The deployment of numbers have become a sine qua non in governance practices worldwide in recent decades. But the reasons behind this development and its implications for governance practices have not been systematically researched and theorised. This introductory article provides a short overview of the historical and contemporary role of numbers in different governance settings. It includes a discussion of the capacity of numbers to foster social identities, relations and truths across national boundaries, to construct issue areas and to enable various modes of surveillance, communication and action at a distance in the global political economy. It argues that the use of numbers in global governance should not be regarded only as a platform for knowledge sharing and learning. More than this, it needs to be understood in broader terms as a mechanism of inclusion and exclusion from complex social hierarchies and relations, as well as in relation to processes of politicisation and de-politicisation that transcend national spaces.
The ability to monitor state behavior has become a critical tool of international governance. Systematic monitoring allows for the creation of numerical indicators that can be used to rank, compare, and essentially censure states. This article argues that the ability to disseminate such numerical indicators widely and instantly constitutes an exercise of social power, with the potential to change important policy outputs. It explores this argument in the context of the United States’ efforts to combat trafficking in persons and find evidence that monitoring has important effects: Countries are more likely to criminalize human trafficking when they are included in the U.S. annual Trafficking in Persons Report, and countries that are placed on a “watch list” are also more likely to criminalize. These findings have broad implications for international governance and the exercise of soft power in the global information age.