|Anurag Jain's Blog|
Thursday, April 08, 2004
Indian economy seems to be booming. Every day there are GDP growth numbers bandied about in newspapers, magazines. While there's no doubt that GDP measures do indicate some sort of progress, apparently it doesn't capture the whole picture. On the negative side, I mean. I remember being taught in 1st year core Macroeconomics course that one of the GDP's drawbacks is that it doesn't capture the negatives as negatives: the money spent in the economy to make things right. For example, police force, crime control, or home generators for power, environmental degradation etc. Moreover, it doesn't capture some positives: economic value of household services etc.
Gross Domestic Product (GDP) is an artifact developed during World War II. And useful that it might be as itself, it needs a major overhaul for today's world. Economists at Redifining Progress are developing a better measure called Genuine Progress Indicator (GPI). GPI takes off from where GDP ends. The GPI results for the state of California are quite interesting. More at their site.
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