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Imputing Away the Ladder: Implications of Changes in GDP Measurement for Convergence Debates and the Political Economy of Development

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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.

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... 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. ...
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... 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. ...
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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.
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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.
Article
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.
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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.
Article
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.
Article
If we take recent income per capita estimates at face value, they imply that the average medieval European was at least five times ‘better off’ than the average Congolese today. This raises important questions regarding the meaning and applicability of national income estimates throughout time and space, and their use in the analysis of global economic history over the long term. This article asks whether national income estimates have a historical and geographical specificity that renders the ‘data’ increasingly unsuitable and misleading when assessed outside a specific time and place. Taking the concept of ‘reciprocal comparison’ as a starting point, it further questions whether national income estimates make sense in pre-and post-industrial societies, in decentralized societies, and in polities outside the temperate zone. One of the major challenges in global history is Eurocentrism. Resisting the temptation to compare the world according to the most conventional development measure might be a recommended step in overcoming this bias.
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Many scholars of the Chinese economy have concluded that official estimates of China's GDP growth rate are too high. Journalists have popularized this view, but we disagree. We use a method that examines several strategic indicators that are suggested by basic social accounting principles and conclude that principal components of these indicators reflect the movement of official estimates of the Chinese economy. This conclusion holds whether one uses annual, quarterly or monthly indicators. It cannot be claimed that we have proved that GDP as officially measured is correct. No one knows the correct estimate; that is the whole point of showing how different such estimates can be, depending on how they are calculated, and this is true the world over. Our estimates survive diagnostic tests, within-sample interpolations and outside-sample extrapolations in monthly, quarterly, and annual time frames. It is reasonable to expect that introduction of quality adjustments will justify higher estimates.
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This article engages in a critical analysis of two of the most influential contemporary economic publications — namely, the competitiveness reports published annually by the World Economic Forum and the International Institute for Management Development. Drawing on Michel Foucault's work on governmentality, it emphasises the governmental work that these reports do in relation to ongoing efforts aimed at governing states in a neoliberal fashion. In and through competitiveness indexing and country benchmarking, they are argued to contribute not only to constitute states as flexible market subjects, but also to guide their `rational' conduct thus constituted. Acknowledging that there is nothing natural or given about states striving to improve their `national competitiveness', the article concludes with some broader reflections on the future prospects for neoliberal governance of states.
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Western governments' response to ongoing economic crisis has demonstrated that the financial services sector is seen to perform a critical and productive function in today's capitalist economies. This paper explores how this politically potent perception of productiveness has come to achieve the hegemony that it now enjoys. A principal forum for the 'making' of finance sector productiveness, it shows, has been the tradition of national accounting and its reporting of key economic metrics such as gross domestic product. By placing different activities on different sides of a pivotal 'production boundary', national income statisticians effectively dictate what counts as productive - as adding value to the economy - and what does not. Finance's contemporary representation as productive is predicated, the paper shows, on a long and contested history of boundary negotiation.