Progress over productIn March 1989, the Alaskan oil tanker Exxon Valdez ran aground and leaked 40,000 cubic meters of oil. Around 2,000 kilometers of seashore was polluted and many people crowded to Prince William Sound near Anchorage to help clean up the mess.
The restaurants, hotels, gas stations and stores in the remote location were suddenly full of people, stimulating an unprecedented business boom. The gross domestic product of Alaska increased, too.
Could it be said that Alaska improved because its GDP increased, even though countless species of seabirds and whales died?
The GDP is an index that evaluates total production volume with a market value standard. All things produced are, of course, presumed to be good products. It does not differentiate between sustainable and non-sustainable products, nor does it differentiate between economic activities that actually improve living standards and those that do not.
Even if nature is depleted by the excavation of resources and reckless deforestation, GDP can still increase. This leads to the criticism that GDP is a calculator that only knows how to add and does not know how to subtract.
GDP was created by the U.S. Department of Commerce during the Great Depression in the 1930s, and it was used as a guideline for measuring economic revival.
However, even Simon Kuznets, the economist who created the GDP, warned against misuse of the measure idea, saying, “There are hardly any cases where the welfare conditions of a country can be inferred from total national profits.” (Jeremy Rifkin, “European Dream”).
With the problems with the GDP rising to the surface, there are efforts to develop a new index to replace the GDP. One of the major new indexes proposed recently is the Genuine Progress Indicator. GPI measures factors that are not included in the GDP, such as reduction of resources, pollution, long-term environmental damage and domestic chores.
There is also the Index of Sustainable Economic Welfare. It adds unpaid domestic chores and subtracts losses due to crime, pollution and accidents.
The Korea Statistical Information Service is also developing a green GDP that makes allowances for environmental costs.
The key mission of the third Organization for Economic Cooperation and Development international forum in Busan Oct. 27 to 30 was development of a new social development index.
It aimed to create a national development index that can substitute or supplement one-dimensional economic standards like the GDP.
However, it will be difficult to create an index that expresses genuine social development unless we change the idea that resources are infinite and endless development is possible.
The writer is a reporter specializing in environmental issues.
By Kang Chan-soo