In this policy brief for CROP (Comparative Research Programme on Poverty) GovInn director Lorenzo Fioramonti explains how alternative indicators are likely to highlight the important contribution of social cohesion and natural welfare to economic development, thus helping to eradicate poverty in the continent.
Fioramonti’s article this week focuses on the dangers on relying on simplified figures such as GDP to assess the development and the wealth of a country and make business decisions.
“When businesses base investment decisions on indicators such as the gross domestic product (GDP) they miss the forest for the trees. GDP is a very myopic measure of economic performance, which counts profits but excludes costs. Moreover, it flattens society and the market, thus giving the impression that growth affects all businesses (and people) in the same manner. In fact, there can be good and bad, equal and unequal, sustainable and unsustainable GDP growth.
“The “Africa rising” debate animating the investment community these days is a case in point, insofar as it does not pay attention to issues of sustainability and distribution, which are likely to hamper the performance of these “rising” economies. “
“Even good numbers can be misleading: indeed, numbers, by design, (over)simplify reality. In a numbers-driven world, only what can be measured counts. A metric-dependent business is more likely to forfeit long-term goals, which are harder to quantify, for short-term returns.”
Read it all on BusinessDay
“GDP became the yardstick for measuring progress and still often serves as a proxy for overall national well-being. Policymakers think of national economic life in terms of GDP: raising GDP is a primary policy goal and people across the world look to GDP growth rates to assess how well their leaders are guiding economic policy choices. Yet today GDP is under fire from a variety of sources. Why?”
Gross Domestic Problem is reviewed along with Diane Coyle’s “GDP: A Brief but Affectionate History” and Zachary Karabell’s “Leading Indicators: A Short History of the Numbers That Rule Our World”. In his in-depth analysis Stephen Macekura, postdoctoral fellow at the John Sloan Dickey Center for International Understanding at Dartmouth College (US), says of Fioramonti’s book:
“Fioramonti presents the most scathing critique. He criticizes the deeply held faith that raising GDP can solve all political and social problems—what he calls the “dogma of infinite GDP growth.” For him, the reliance on GDP derives from a technocratic worldview that glorifies experts, corrodes communal values, and devalues the natural world. In addition to inveighing against this worldview throughout his book, he highlights contemporary social movements that are challenging both the use of GDP and mainstream society more broadly. He explains the “transition” and “de-growth” movements, which seek to downscale production and consumption, encourage participatory decision-making, decentralize power towards the community level, redistribute resources along more equitable lines, and lower humankind’s ecological footprint. Similarly, he recounts the efforts of communities that use their own currencies and banking systems to break free of the larger financial power structures (states, multinational corporations) that dominate economic transactions worldwide. In general, he sees technocracy and its GDP “dogma” as powerful centralizing and anti-democratic forces, and he celebrates grassroots, local movements that show “alternative ways of life are not just possible but also desirable.” His prescriptions are thus cultural and political; no merely technical fixes will suffice.”
Read the full article on Public Books
“Framing Environmental Problems: Problem Entrepreneurs and the Issue of Water Pollution from Agriculture in Brittany, 1970–2005” by GovInn researcher Magalie Bourblanc was included in the special selection that the Journal of Environmental Policy & Planning on the occasion of the The 9th International Conference on Interpretive Policy Analysis.
The papers included in the selection are described as “excellent examples of the deployment of interpretive and critical approaches in the field of environmental policy and planning”.
Abstract: The claim that public problems are constructs is now widely recognized as justified and was first established in social problem theory. The high instability of problem definition activities in the case of water pollution coming from agriculture in Brittany demonstrates this particularly well. The objective of this article is to describe ways by which an environmental movement organization (EMO) conceives its activities of public problem construction. Inspired by social movement theory, but aiming at overcoming its weaknesses, the paper seeks to highlight the influence of EMO endogenous meaning production in problem construction processes, a dimension often overlooked even by framing theory. In a bid to support that claim, the paper shows the influence of the affective dimension over the strategic one within the problematization process. Forging a conceptual distinction characterized by a perceived problem and strategic definitions, the paper underlines the fundamental interrelated nature of these two components and consequently emphasizes the reciprocal dependence of the perceived problem over the strategic (either material or cognitive) definitions. Finally, the paper evokes the benefit and impact of this conceptual distinction on the policy-making process. Read the full paper here
THE Corporate Governance Index 2014, which GovInn released last week in partnership with the Institute of Internal Auditors of SA, provides a worrying snapshot of the state of business performance in SA.
The index finds that the leadership skills, accountability and overall conduct of public and private corporations have worsened over the past year. GovInn director Lorenzo Fioramonti comments on the perilous relationship between economic and political powers on Business Day, South Africa’s leading business newspaper.
If public officials take bribes to favour a few at the expense of the public good, then it is worth asking: where does the money come from? And the answer usually is: from business.
The simplistic juxtaposition between corrupt government and virtuous business does not pass the reality check.
Read the full article here
GovInn research Fellow Christopher Changwe Nshimbi comments on the absence of Zimbabwe at the recent US-Africa summit. What are the responsibility of the Africa Union and of SADC towards the citizens of Zimbabwe?
AU and SADC should have ensured free and fair elections in Zimbabwe 2013. However, the AU has inherent weaknesses regarding intervening in domestic stalemates as in Zimbabwe and Cote d’Ivoire. SADC should strengthen rules regarding elections, citizens’ rights in electoral processes and SADC’s enforcement role. Moreover, SADC and the AU should revise their approaches to state sovereignty.
Do you agree? Read it all on the Nordic Africa Institute Forum website
South Africa is on an economic roller coaster. After the five-month strike in the platinum mines and turmoil in the metal sector, our country is still grappling with a credit downgrade and gloomy forecasts for economic growth.
Pundits warn that if the gross domestic product (GDP) does not pick up in the coming months, a recession will be inevitable, with disastrous consequences for all of us. Our eyes are all on this magic number. But what is GDP? Is GDP really helping us measure the state of our economy? Or is it a misleading indicator that contributes to wrong policy decisions, especially at a time of growing unrest and dissatisfaction with the transformation of the economy?
Read the full article on South African economy and the inadequacies of GDP, on Business Day, South Africa’s leading business newspaper.