Beyond GDP: Regional development indicators

09-02-2016

The ‘Beyond GDP’ approach considers GDP (gross domestic product) insufficient to capture the multidimensional nature of progress and promotes the use of alternative indicators in policy. Although commonly used as an indicator of well-being, GDP is a measure of economic performance, reflecting production expressed in monetary terms. It does not account for social and environmental costs, nor does it reflect social and territorial inequalities. The recent crisis revealed that GDP figures alone can mask problems accumulating in the economy. Alternative indexes can enhance monitoring and guide policies towards balanced economic, social and environmental goals. The choice of indicators matters, as this has an impact upon policy design, monitoring and evaluation. To date a variety of alternative indicators have been developed by international organisations, statistical offices and NGOs (for instance, the Human Development Index and the Ecological Footprint) and are increasingly being used in policy-making, including at EU level. At the regional level, versions of global indexes exist alongside regionally designed indexes, but the availability and reliability of data requires improvement. In the EU context, the ‘Beyond GDP’ debate has been re-ignited in connection to a concrete example of GDP use in policy – the allocation of EU structural funding, for which the eligibility of regions is currently based solely on GDP. The ongoing debate on the post-2020 cohesion policy framework explores the possibility of using other indicators to allocate EU funding and assess territorial development.

The ‘Beyond GDP’ approach considers GDP (gross domestic product) insufficient to capture the multidimensional nature of progress and promotes the use of alternative indicators in policy. Although commonly used as an indicator of well-being, GDP is a measure of economic performance, reflecting production expressed in monetary terms. It does not account for social and environmental costs, nor does it reflect social and territorial inequalities. The recent crisis revealed that GDP figures alone can mask problems accumulating in the economy. Alternative indexes can enhance monitoring and guide policies towards balanced economic, social and environmental goals. The choice of indicators matters, as this has an impact upon policy design, monitoring and evaluation. To date a variety of alternative indicators have been developed by international organisations, statistical offices and NGOs (for instance, the Human Development Index and the Ecological Footprint) and are increasingly being used in policy-making, including at EU level. At the regional level, versions of global indexes exist alongside regionally designed indexes, but the availability and reliability of data requires improvement. In the EU context, the ‘Beyond GDP’ debate has been re-ignited in connection to a concrete example of GDP use in policy – the allocation of EU structural funding, for which the eligibility of regions is currently based solely on GDP. The ongoing debate on the post-2020 cohesion policy framework explores the possibility of using other indicators to allocate EU funding and assess territorial development.