By P K Balachandran
Sri Lanka is ranked 74 among 169 countries in the Social Progress Index for 2022. Compiled by a well-known, non-profit, Washington DC-based rating agency, the report places South Asian countries in Tier 3 and Tier 4 among six Tiers.
Sri Lanka, Bhutan and the Maldives are in Tier 3, while India, Bangladesh and Pakistan are in Tier 4. Clearly, despite GDP growth, South Asian countries are lagging behind in terms of social progress and quality of life parameters.
Interestingly, the US and UK are in Tier 2. Not surprisingly, the Scandinavian countries are in Tier 1, along with Japan, Australia and France. Russia is in Tier 3 along with China.
The average world score is 65.24 which means that the world at large is in Tier 3 with a long way to go in terms of social well-being.
Dissonance With GDP
What is interesting is that the countries’ rankings do not accord with their GDP. The World’s biggest economy, the US, with a GDP of US$ 23.2 trillion is in the 25 the. position with a score of 84.65 and in Tier 2. The second biggest economy is China, with a GDP of US$ 17.73 trillion) is 94., with a score of 65.74 and placed in Tier 3.
The fifth-largest economy, India, with a GDP of US$ 3.17 trillion occupies the 110 positions with a score of 60.9 and placed in Tier 4. Sri Lanka with a GDP of US$ 88.93 billion is 74 th., with a score of 69.22 and in Tier 3. The Maldives with a GDP of US$5.5.56 billion is 79 the. with a score of 68.02, and placed in Tier 3. Bhutan with a GDP of 2.04 billion is 78 the. with a score of 68.05.
The countries have been ranked per 12 criteria: Nutrition and Basic Medical Care; Water and Sanitation; Shelter; Personal Safety; Access to and Basic Knowledge; access to Information and Communication; Health and Wellness; Environmental Quality; Personal Rights; Personal Freedom and Choice; Inclusivism; and Access to Advanced Education.
The counties have been rated as per their “capacity to meet the basic human needs of its citizens, establish the building blocks that allow citizens and communities to enhance and sustain the quality of their lives, and create the conditions for all individuals to reach their full potential’.
The report says that social progress has become an increasingly critical agenda for leaders in government, business, and civil society.
“The demand for better lives and greater equality is evident across the world as we see protests and new political movements for racial equity, women’s rights, climate change, gun violence and beyond. As the Covid-19 pandemic swept the world it highlighted our structural weaknesses and our inequities. There has been a growing expectation that it is not just governments that need to play a role in delivering improvements, but that business is also accountable and must deliver improvements in the lives of people, as well as protect the environment for us all,” the report said.
Further: “Progress on social issues does not automatically accompany economic development. Rising income usually brings major improvements in areas such as access to clean water, sanitation, literacy, and basic education. But on average, personal security is no better in middle-income countries than in low-income ones and is often worse. And too many people—regardless of income—live without full rights and experience discrimination or even violence based on gender, religion, ethnicity, or sexual orientation. Traditional measures of national income, such as GDP per capita, fail to capture the overall progress of societies.”
Since 1990, the United Nations Development Program (UNDP) has used the Human Development Index (HDI) in its annual Human Development Report. The purpose of the report is to show how well the management of economic growth and human development is actually improving human well-being in the nations of the world.
The HDI defines human development as the “process of enlarging people’s choices, to live a long and healthy life, to be educated, have access to resources needed for a decent standard of living, to have political freedom, guaranteed human rights and personal self-respect.”
Need To Move Way From GDP
In their 2009 paper entitled: Beyond GDP: The Need for New Measures of Progress Robert Costanza, Maureen Hart, Stephen Posner and John Talberth called for a better ranking system than the GDP. They point out that the GDP enunciated by the US economist Simon Kuznets in the 1930s was never meant to be a measure of national well-being. It had a different function and has been misused, the authors say.
“Useful measures of progress and well-being must be measures of the degree to which society’s goals (i.e., to sustainably provide basic human needs for food, shelter, freedom, participation, etc.) are met, rather than measures of the mere volume of marketed economic activity.”
“GDP measures the flow of goods and services produced within the market (goods and services publicly traded for money). Some ‘nonmarket’ production is included in GDP, such as defense spending by the federal government and nonprofit spending on emergency housing and health care. But many important economic activities are entirely excluded from GDP measurements, such as volunteer work, social capital formation within healthy family units, the costs of crime and an increasing prison population, and the depletion of natural resources. GDP is a measure of economic activity, not economic well-being,” the economists point out.
“By measuring only marketed economic activity, GDP ignores changes in the natural, social, and human components of community capital on which the community relies for continued existence and well-being. As a result, GDP not only fails to measure key aspects of quality of life; in many ways, it encourages activities that are counter to long-term community well-being,” the authors argue.
GDP measurement encourages the depletion of natural resources faster than they can renew themselves, they charge. Another concern is that current economic activity is degrading ecosystems, thereby reducing the services that, until now, have been provided to humans virtually for free.
“For example, in 1997 it was estimated that the world’s ecosystems provided benefits valued at an average of US$33 trillion per year. This was significantly larger than the total global GDP at the time. GDP encourages depletion because clear-cutting a forest for lumber is valued more in GDP terms than the ecosystem services that forest provides if left uncut.”
Ill-effects of Concentration of Wealth
The economists make the telling point that beyond a certain threshold, further increases in material well-being have the negative side- effects of lowering community cohesion, healthy relationships, knowledge, wisdom, a sense of purpose, connection with nature, and other dimensions of human happiness.
“A highly unequal distribution of income can be detrimental to economic welfare by increasing crime, reducing worker productivity, and reducing investment. Moreover, when growth is concentrated in the wealthiest income brackets it counts less towards improving overall economic welfare because the social benefits of increases in conspicuous consumption by the wealthy are less beneficial than increases in spending by those least well off,” the economists point out.
Importance of Subjective Criteria
The economists advocate subjective criteria as the sense of well-being is subjective and not always based on economic criteria. They recommend the Gross National Happiness (GNH) as an alternative measure of socio-economic progress.
The GNH was originally suggested by the King of Bhutan in the early 1980s as a more appropriate measure for his small kingdom than GDP.
“It was not an actual index, but a principle for guiding Bhutanese development in a fashion consistent with the country’s culture and spiritual values rather than by focusing on increasing economic activity. Since 2004, the Bhutan government has sponsored four international conferences on GNH. Bhutan has established a Gross National Happiness Commission. However, a specific methodology for measuring GNH has not yet been defined,” the economists say.
