By Livia Bizikova and Hajra Atiq, IISD
The recent 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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The first issue of the ‘Beyond GDP’ update series comes in the aftermath of the September 2024 Summit of the Future and covers the period from October through December 2024.
Recommendations for specific indicators and indices to complement GDP performance
The fifth edition of the World Bank’s report on the Changing Wealth of Nations (CWON) themed, ‘Revisiting the Measurement of Comprehensive Wealth,’ presents a methodology, global CWON estimates, and trends of the assets of the wealth portfolio, including trends on non-renewable natural capital, hydropower, forests and agricultural land, blue natural capital, and human capital. As the report’s authors suggest, the publication is intended for a technical audience, including policy advisors, statisticians, and researchers.
A paper titled, ‘Sustainable matrix beyond GDP: investment for inclusive growth,’ published by Kyushu university, discusses the trends for an inclusive wealth index, which integrates biophysical quantities and monetary values of natural, human, and produced capital. The paper compares the inclusive wealth index trends across 163 countries over 30 years and its implications for achieving the SDGs. The findings offer information for policy and decision makers to address sustainability challenges, including investments to improve natural capital and contribute to the Paris Agreement on climate change and the SDGs.
An International Monetary Fund (IMF) article titled, ‘GDP in the Future,’ acknowledges that GDP is the most watched statistics in the world with implications for countries’ economic performance and financial markets. It also recognizes that as an economic statistic, GDP is incomplete as it focuses on “the here and now,” not on the future. The article stresses that complementary measures are needed to assist with measuring “our planet’s true wealth” and prioritizing efforts to promote sustainability. The article suggests complementary approaches to GDP, such as net domestic product and comprehensive wealth, emphasizing that these approaches are getting global traction and can help gauge if economic activity is sustainable.
An article in Sustainability Science titled, ‘Tracing the Evolution of Natural Capital in Global Sustainability Metrics: The Advance of Inclusive Wealth,’ studies previous theoretical developments and reaffirms that natural capital accounting within the Inclusive Wealth (IW) framework provides a robust link between current capital assets and intergenerational well-being. It also highlights the urgency of natural capital depletion awareness in the management of all economies and the need for natural capital accounting within the IW framework to inform policy decisions on sustainable growth.
Review of theoretical and empirical approaches to move beyond GDP
An article published in Scientific Data brings together diverse beyond-GDP metrics developed by different agencies and experts. The Wellbeing, Inclusion, and Sustainability (WISE) database connects 244 metrics, covering 218 countries and 61 country groupings. The WISE database aims to support interdisciplinary research efforts to identify synergies and trade-offs across efforts to address wellbeing, inclusion, and sustainability challenges.
‘Measuring Global Human Progress: Are We on the Right Track?’ is the title of an article published in Annual Review of Environment and Resources. It evaluates theoretical and empirical efforts to measure human progress based on notions of well-being and sustainability and critically analyzes the strengths and weaknesses of the beyond GDP approaches. It summarizes efforts to design and use diverse metrics for measuring sustainability and human well-being across countries and regions over the last four decades. It also demonstrates how different matrices play out in the country context, illustrated by a case study in India.
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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).
