GDP and beyond: Measuring progress in a changing world

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by Commission of the European Communities

Type: Report Published August, 2009


Gross Domestic Product (GDP) is the best known measure of macro-economic activity. Developed in the 1930s, GDP has become a standard benchmark used by policy-makers throughout the world and is widely used in public debates. GDP aggregates the value added of all money-based economic activities. It is based on a clear methodology that allows
comparisons to be made over time and between countries and regions.
GDP has also come to be regarded as a proxy indicator for overall societal development and progress in general. However, by design and purpose, it cannot be relied upon to inform policy debates on all issues. Critically, GDP does not measure environmental sustainability or social inclusion and these limitations need to be taken into account when using it in policy
analysis and debates.

The need to improve data and indicators to complement GDP has been increasingly recognised and is the focus of a number of international initiatives. These initiatives also reflect renewed societal and political priorities. In November 2007, the European Commission (together with the European Parliament, the Club of Rome, the WWF and the OECD)
organised the Beyond GDP conference.3 The conference revealed strong support from policymakers, economic, social and environmental experts and civil society for developing indicators that complement GDP and aim to provide more comprehensive information to
support policy decisions.

This Communication therefore identifies a number of actions that can be taken in the short to medium term. The overall aim is to develop more inclusive indicators that provide a more reliable knowledge base for better public debate and policy-making. The Commission intends to cooperate with stakeholders and partners to develop indicators that are internationally
recognised and implemented.