Quote of the day

“I find economics increasingly satisfactory, and I think I am rather good at it.”– John Maynard Keynes

Saturday 29 July 2023

An alternative to GDP as a measure of a country's growth?

 An interesting idea, but not one that will take off; it might fit into a conclusion, showing broader understanding:

edconway.substack.com
The quest for a better measure of economic progress than GDP has been going on pretty much since GDP was invented, says Ed Conway. Some have suggested life expectancy as an alternative. My suggestion would be to look at the amount of steel a country has. Steel is everywhere. When you travel by train, you are travelling in a steel tube along steel rails using steel escalators and steel lifts to get you to the platform. The more infrastructure you have in your country, the more cars and trains and hospitals and schools, the more steel you have. Simply adding up how much steel there is in use, for which good data exist, and dividing by the number of people, will give you a pretty good sense of how developed that country is. Most developed economies, places such as the UK, US, Japan and most of Europe, have around ten to 15 tonnes of steel per capita. In the UK it’s 13.4. For the US it’s 13.8 and Germany 11.9. China has something like seven. In sub-Saharan Africa, it’s mostly below one. In Mali and Niger, the figure is barely 0.1. “This, to me, is a far more visceral way of explaining development and the gaps between nations than GDP […] And happily, using this metric is far more intuitive (and less prone to things like purchasing-power parity adjustments) than things like GDP per head.”

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