GDP Growth is not a Good Measure of Progress
Economic growth, measured as per capita GDP, is currently taken as a measure of a country’s progress. It is simple and certainly provides the personal income and governmental resources needed to run the country. In the past half century, economic growth has surely improved lives of people across the world and lifted people out of poverty.
However, it is becoming increasingly clear that GDP growth alone leads to incomplete development and is hitting the environment limits. In many rich societies it appears to have hit the roof, with no further real development with increasing GDP. Moreover, economic growth leads to high levels of inequality that has polarized the world between a “rich North” where obesity and ‘lifestyle diseases’ threaten people’s lives and a “poor South” where people die of under-nutrition and easily preventable diseases. This is a comical situation, speaking in a lighter tone.
Therefore, a change is imperative in how we go about development and this change must be about building not just rich societies but good and just societies. For this, we need to look beyond GDP and include social and environmental measurements into national performance measurement. Tracking the progress of social indicators will also help to better utilize the economic gains for improving the well being of people.
Need to Measure Social Progress
To advance social progress, then, we must learn to measure it comprehensively and rigorously. Measuring multiple dimensions of social progress is indispensable in understanding its components, benchmarking success, and catalyzing improvement. While there have been some laudable efforts to measure wellbeing, these capture only limited aspects of social progress, and are uneven in breadth and scope across countries.
Systematic measurement of social progress is also important to understand various factors that aid economic advancement. Therefore, social progress also promotes economic development, setting a virtuous cycle. Understanding pressing societal challenges also creates new economic opportunities for business and future directions.
What is Social Progress Index?
The Social Progress Index (SPI) is an attempt to address these gaps and opportunities. It provides a holistic, objective, outcome-based measure of a country’s wellbeing that is independent of economic indicators. It will enable a new level of sophistication in understanding the complex relationship between social progress and economic development. The Index framework is designed to be readily improved and expanded to incorporate new aspects of social progress, as well as improved data. It checks the social progress alongside the GDP for a country’s performance.
The model is based on the following definition of social progress:
“Social progress is the capacity of a society to meet the basic human needs of its citizens, establish the building blocks that allow citizens and communities to enhance and sustain the quality of their lives, and create the conditions for all individuals to reach their full potential.”
This overall definition can be disaggregated into three dimensions of social progress: Basic Human Needs, Foundations of Wellbeing, and Opportunity. Each dimension is made up of four equally weighted individual components. Incidentally, the United Nations has also identified three pillars on which the post- 2015 Sustainable Development Goals (SDGs) must rest: economic, social and environmental.
The three dimensions of the Social Progress Index roughly mirror the progression that most individuals, families, communities, and societies go through in achieving higher and higher levels of social progress. The model draws heavily on previous literature, notably the capability approach pioneered by Amartya Sen, which emphasizes the multidimensional nature of wellbeing and the importance of freedom of choice.
The Three Dimensions of SPI
The first dimension captures the degree to which the most essential conditions for survival are met. These essential needs must be satisfied to create the minimum standards for further progress.
The second dimension of social progress captures the degree to which a country has created the set of policies and institutions to support improving wellbeing and community in a sustainable natural environment.
The third dimension captures the degree to which all citizens are able to reach their full potential. This rests on things like personal rights, freedoms and inclusion.
The Social Progress Index 2014
The 2014 Social Progress Index reveals striking differences across countries in their social performance, highlights the very different strengths and weaknesses of individual countries, and provides concrete guidance for national policy agendas. It rates 132 countries on more than 50 indicators, including health, sanitation, shelter, personal safety, access to information, sustainability, tolerance and inclusion and access to education.
It gave New Zealand the top ranking followed by Switzerland, Iceland and Netherlands. Chad ranks the lowest in the index. It placed India at 102nd position and Bangladesh at 99th. The best performer in this region is Sri Lanka (at 86th) and the worst is Pakistan (at 124th).
Among the five BRICS countries India is lowest place after China at the 90th position. Brazil (at 46th position) shows best social progress. Both India and China currently underperform on social progress relative to their GDP per capita status; they need to better turn their economic success into improving social conditions.
Recently, the SPI was adopted as an official measure of national performance by the Government of Paraguay which will guide the public and private investment choices. In Brazil too, the Index has been adopted by social entrepreneurs and businesses as a tool to understand community needs and guide social progress.