NEWS: GNP methdology a huge misleader, BBC post

[Far from 'news,' though I though it was worth passing on that Cambridge
economics researchers were saying this in the BBC press.]



Article by: BBC (posted by www.EconomicDemocracy.org)    
Saturday 09 Jun 2001
                        
Summary:Cambridge University economists and former
 president of the Royal
              Economic Society releases study showing the brutalization of the 
poorest economies, and openly bashes the GNP as an economic measure

Weblink: http://news.bbc.co.uk/hi/english/business/newsid_1375000/1375307.stm

Reference at indymedia website:
http://www.indymedia.org//front.php3?article_id=45932

Article:
The world\'s poor may be sinking deeper into
              poverty, according to a new report by a top
              economics professor that turns traditional
              insights into poverty reduction upside down. 

              The Indian sub-continent and sub-Saharan
              Africa - two of the poorest regions of the
              world which make up around a third of the
              world\'s population - have really become poorer
              over the past decades, according to the
              research. 

              This is in stark contrast
              to the much more
              widely used - and
              potentially misleading -
              data based on Gross
              National Product (GNP)
              and the Human
              Development Index. 

              And the belief that the economies of the
              poorest countries are growing may, in some
              cases, have led to less aid, development loans
              or grants. 

\"The implications of these results should be
              heart-breaking,\" concluded Partha Dasgupta, a
              Professor of economics at Cambridge University
              and the former president of the Royal
              Economic Society. 

              Deteriorating natural resources 

              Governments, development organisations and
              the World Bank use GNP to gauge the rate of
              growth of a certain country\'s economy. 

              But the measure of GNP - the monetary value
              of all goods and services provided by the
              economy - could be fatally flawed as it
              disregards vitally important factors such as the
              deterioration of natural resources.

GNP may, for example,
              be rising healthily due
              to a booming diamond
              trade. But if those
              diamond mines are
              going to run out in a
              couple of years time,
              then the prospects of
              poverty reduction are
              falling rather than
              growing. 

AVERAGE CHANGE IN GNP PER HEAD (1965-1996):

BANGLADESH: 1%
INDIA: 2.3%
NEPAL: 1%
PAKISTAN: 2.7%
CHINA: 6.7%
SUB-SAHARAN AFRICA: -0.2%

AVERAGE CHANGE IN WEALTH PER HEAD (1970-1993):

BANGLADESH: -2.6%
INDIA: -0.1%
NEPAL: -3%
PAKISTAN: -1.9%
SUB-SAHARAN AFRICA: -3.4%

CHINA: 0.8%

[I can\'t help notice that Africa gets screwed the worst, as usual;
and although I\'m NOT a fan of china\'s communism (which is
actually very similar to the State-coordianted-capitalism that
is the true name for are pretend \'free market capitalism\'),
I notice also that THIS state, the one LEAST behaving
economically the way we want (and whom we have the
least power to order via world bank mandates etc), China,
is the only one with at least positive (almost 1%) growth per year -HB]

The depletion of
              natural assets such as
              forests, water, oil,
              fisheries, soil and
              minerals will have a
              dramatic impact on the
              survival ability of the
              future generations. 

              \"GNP is by definition
              insensitive to the
              depreciation of capital
              assets, including
              natural capital, and
              can mislead hopelessly,\" said the report. 

              \"It is totally insensitive to the future,\"
              Professor Dasgupta told BBC News Online. 

Nations in decline 

              If the decline of natural capital is included
              under a new measure - which the report dubs
              wealth per head - traditional insights into
              poverty reduction are turned upside down. 

              It reveals that Sub-Sahara Africa, Bangladesh,
              Nepal, India and Pakistan are all heading into
              deeper gloom and poverty. 

              While this is not surprising in the case of
              sub-Saharan Africa which is widely known to
              have regressed in terms of many
              socio-economic indicators, the figures for the
              Indian subcontinent are shocking. 

              Pakistan\'s GNP, for example, grew at a healthy
              2.7% per year, implying a more than doubling
              of living standards between 1965 and 1996. 

But the alternative measure of wealth shows
              that living standards have actually almost
              halved over this period. 

              Blowing natural resources 

              Of course, misleading data tends to lead to the
              introduction of misleading policies. 

              The assumption that a
              steady growth in GNP
              automatically leads to a
              reduction in poverty
              could have led to a
              decrease in the amount
              of development aid
              allocated to any one
              country. 

In addition, some welfare economists claim
              that structural reforms required by the World
              Bank and the International Monetary Fund
              have sometimes led to a speeding up of the
              decline in natural resources. 

              The temptation to blow natural resources is
              high for some countries when they struggle to
              increase GNP after taxes and subsidies have
              been removed. 

              The emphasis on trying to increase any one
              nation\'s GNP could be increasing the pressure
              to destroy future resources. 

              Some countries for example, have boosted
              timber exports in order to raise export quotas
              without taking into account the future
              implications of deforestation. 

The measure of GNP has already come under
              attack for a number of different reasons. 

              While some say that it is soulless, others point
              out that it gives no indication of the rich-poor
              divides within a country.

Source:
http://news.bbc.co.uk/hi/english/business/newsid_1375000/1375307.stm

Posted by: www.EconomicDemocracy.org



INDIA: -0.1%