By Livia Bizikova and Hajra Atiq, IISD

The September 2024 UN Summit of the Future (SoF) stressed the need to address well-known shortcomings of gross domestic product (GDP) as an indicator of wealth by developing a framework for measuring sustainable development progress that can complement and go beyond GDP. The need for such measures is widely recognized. The UN Secretary-General has described overreliance on GDP as a “glaring blind spot in how we measure economic prosperity and progress.” The Pact for the Future – the Summit’s outcome document – specifically identifies the need “to develop recommendations for a limited number of country-owned and universally applicable indicators of sustainable development that complement and go beyond GDP,” taking into account the 2030 Agenda for Sustainable Development.

In anticipation of growing global efforts to select indicators that move beyond GDP, the SDG Knowledge Hub is providing regular updates on publications on this topic. The authors use databases of agencies and peer-reviewed literature to collect such information.

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In this issue, we highlight several significant publications that measure wealth and examine its importance in addressing global challenges such as climate change, biodiversity loss, and inequality. In the papers listed below, the authors also discuss the limitations of relying solely on GDP as a measure of progress in countries like the US, the UK, and Pakistan.

Approaches to measure progress in the context of global challenges

A new book by Diane Coyle titled, ‘The Measure of Progress,’ argues that the methods governments use to measure the economy were designed in the 1940s and are now outdated. These old frameworks were built for a very different era, she notes, and do not consider more modern issues like digital innovation, climate change, or inequality. Therefore, the book calls for adopting new definitions, categories, and data that reflect intangible assets, sustainability, and digital activity and argues for moving toward meaningful and inclusive growth.

In Nature Climate Change, a perspective article explores the linkages between wealth inequality, investments in implementing climate policies, and their benefits to reduce risks and increase resilience. The findings show that while climate policies impact aggregate wealth, they also have impacts on wealth distribution and inequality. The article proposes a conceptual approach and a research agenda on linkages between wealth and efforts to address climate change.

A recent article in Risk Analyses explores the contributions of using the inclusive wealth index to measure economic activity and address the unintended consequences of economic activity. The article stresses that using a holistic approach to measure economic progress will also contribute to preserving natural capital and increase resilience to global risks.

A recent blog by the World Bank reiterates some of the major findings of the World Bank’s 2024 ‘Changing Wealth of Nations’ report. The blog stresses the challenges of wealth concentration and growth, changes across the capitals such as produced, human, renewable, and non-renewable natural capital and integration of findings into policymaking to focus on sustainable development and guide future economic planning.

A recent blog by the UN Conference on Trade and Development (UNCTAD) presents estimates based on new data from the Inclusive Growth Index, which combines GDP with indicators of living conditions, equality, and environmental sustainability. The blog highlights linkages between living conditions, equality, and environmental sustainability across countries and global trends.

The Beyond Lab’s ‘Beyond GDP’ initiative aims to advocate for the opportunities and contributions of youth to engage in addressing challenges of solely relying on GDP as a measure of progress. A recent article argues that GDP is insufficient, as it doesn’t capture sustainability or long-term impacts, such as environmental damage. Policymakers are encouraged to move beyond outdated models and prioritize sustainability and equity. 

Country-level efforts and initiatives to move beyond GDP

A Schneider Electric blog discusses the importance of making growth benefit people rather than the other way around. Referring to a New York Times report titled, ‘The U.S. Economy Is Racing Ahead. Almost Everything Else Is Falling Behind,’ the blog highlights that while the US has the fastest-growing economy, it ranks lowest in life expectancy among wealthy nations. It emphasizes that GDP growth alone doesn’t guarantee well-being and suggests that a well-being economy is a viable way to realign societal priorities.

A report by Green Alliance titled, ‘The Nature of Our Economy: Implementing the Dasgupta Review,’ argues that the UK’s economic system fundamentally undervalues nature, contributing to environmental decline and long-term economic risk. Building on the Dasgupta Review, it proposes reforms in macroeconomics, microeconomics, and governance to ensure natural capital is properly accounted for. These include embedding biodiversity into national accounting, incentivizing sustainable business practices, and establishing legally binding nature recovery targets.

Several articles address the various aspects of moving beyond GDP in Pakistan. An article titled, ‘Beyond GDP Metrics,’ highlights the importance of taking a developing country perspective and underscores the role of transformative technologies in democratizing artificial intelligence (AI) and other technologies to empower individuals while fostering innovation and national development. By prioritizing intellectual growth and inclusive access to technology, societies can break free from colonial economic models and build equitable, knowledge-driven economies, it argues.

A story on the benefits of applying the inclusive wealth to guide Pakistan’s comprehensive economic restructuring focuses on investment, fiscal discipline, and reducing government involvement. Developing human capital through education, healthcare, and innovation is crucial, as is preserving natural capital, according to the article. Integrating inclusive wealth into national policies can promote inclusive growth and ensure long-term economic stability, it argues.

An Arab News publication stresses the importance of complementing GDP to better account for economic realities and well-being, including investments in human capital, productivity, and competitiveness. Despite Pakistan’s growth, poverty and inequality persist due to poorly executed reforms and a shielded private sector. The article underscores that real reform would require a drastic shift in fiscal policies, including tax expansion, debt restructuring, and investment in education and healthcare.

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This Update is part of a series that seeks to raise awareness of efforts to advance metrics that go beyond GDP, focusing primarily on publications produced by international agencies and peer-reviewed journals. By highlighting topics of theoretical and conceptual significance, including suggestions and applications of specific indicators and indices to complement GDP, the series aims to inform and support sustainable development decision makers in their efforts to go beyond GDP. This project was made possible through financial support provided by the International Development Research Centre (IDRC).