To GDP and beyond: The past and future history of the world’s most powerful statistical indicator

2.1 Early developments

The SNA and the most recognizable indicators associated with those accounts, such as GDP and gross national income (GNI), are progeny of the great depression and World War Two. Forged in the fires of these seismic events, they emerged to become global standards [1]. But the origins of national accounting, or what began as national income statistics, can be traced as far back as the seventeenth century. William Petty is usually credited with conceiving national income.1

Maddison [10] notes that between the eighteenth century and the 1930s, there were about thirty attempts to measure national income in Britain. There were of course important developments also being made elsewhere. One notable contribution to national accounting came in 1758 when Francois Quesnay published his Tableau Economique – the spiritual parent of today’s input–output tables. After Quesnay, the arithmetic approach largely fell out of fashion and did not resurface in any serious way until the twentieth century. During that long hiatus, the great strides made in economics were theoretical but with profound implications for national accounting. From this perspective, Smith’s great intellectual contribution was the production boundary and the distinction between productive and unproductive labor [15]. Other important arguments, notably between wealth (Marshall) and welfare (Pigou) continue to reverberate today.

The Great Depression highlighted the need for reliable economic evidence and focused minds on both sides of the Atlantic. Neither economists nor governments had any real grasp of what was happening and consequently they did not know how to manage the worsening global economic crisis. By this time, only around 20 countries had ever attempted to measure their national income [12]. Arising from this crisis, two great pioneers of national accounting emerged. In the United Kingdom, a lone academic, Colin Clark, began working on national income estimates. Meanwhile in the United States Simon Kuznets was sponsored by the US government to undertake parallel work.

Colin Clark has been described by Lepenies [9: 31] as ‘one of the important modern pioneers of gross domestic product.’ His analyses were based almost entirely on empirical data and accompanied by pages of metadata. Described as ‘an obsessive collector of data’ [1: 25], he introduced ‘a new degree of care and thoroughness’ [15: 12] to the measurement of national income.

National Income and Outlay, published by Clark in 1937, measured aggregate economic activity, or what he called ‘national income’, from three perspectives: income, expenditure, and production. He provided estimates in both current and constant prices and factored in depreciation of fixed capital. Hence, Clark is considered the inventor of gross national product (GNP). In 1940, he published Conditions of Economic Progress, presenting comparable estimates of real income across countries adjusted for differences in the purchasing power of currencies. In doing so, he pioneered comparative analysis of economic performance across space and time, including prototype purchasing power parity (PPP) exchange rates.

On the other side of the Atlantic, prompted by the great depression, the US Congress demanded better statistics on economic activity. The depression had self-evidently wrought economic chaos but there were no reliable or up to date statistics to describe the overall economic situation. In June 1932, ‘reeling from the prolonged recession’ [16: 53], the US Senate demanded that the Secretary of Commerce submit estimates of the total national income of the United States for the years 1929–1931.

Simon Kuznets, working at the National Bureau of Economic Research (NBER), was tasked with creating a set of national accounts. His 1933 article National Income and his study National Income, 1929–1932 were ground-breaking. His analyses revealed a 50% drop in national income, providing justification for the public investment measures implemented as part of the New Deal [18, 4].

2.3 The debate on including government

The first reference to GNP in the literature was an article published by Brookings Institution statistician, Clark Warburton in 1934, entitled Value of gross national product and its components 1919–1929 in the Journal of the American Statistical Association [17, 19]. Warburton’s concept of GNP was much broader than that suggested by Kuznets, and importantly included government spending.

While the great depression played a central role in the birth of national accounting, it was World War 2 and Keynesian economics that played a determining role in how it was constructed. Keynes’ pamphlet How to Pay for the War [20], where government spending was included in national income, profoundly affected thinking in the US. The British approach was attractive as it could be used to demonstrate that an increase in government defense spending did not necessarily entail a prohibitive fall in national income. Crucially Keynes brought the role of the state front and center as a final, rather than only an intermediate, consumer. The realities of wartime economics were consistent with the Keynesian theory of government stimulus. Reflecting the realities of an economy preparing for war, the role of production was also emphasized. Consequently, Vanoli [21: 20] views the World War 2 as the real ‘birth of National Accounts.’ Others too note the importance of Keynes’ role in the development of modern national accounts [15, 3, 9, 1]. Influenced by Keynesian logic, American thinking shifted away from the Kuznets approach in 1941 and produced an estimate of GNP that included public expenditure (including defense spending). The following year, Richard Gilbert [22], in an article Measuring national income as affected by the war published in the Journal of the American Statistical Association, set out the now familiar identity: GDP = C + I + G + X - M.

Kuznets opposed the inclusion of government spending in GNP. In his papers National Product, War and Prewar (1944) and National Product in Wartime (1945) he argued against this approach. But the British ‘war-time’ definition of the economy won the day. Toward the end of the war, GNP, that included government spending, replaced what was then referred to as national income as the main statistic for assessing economic health. By 1945 Roosevelt was using the term GNP in his speeches. Given the massive military spending that comprised Roosevelt’s Victory Program, Weigley [23: 146] has baptized World War 2 a ‘gross national product war.’3

The idea of an interdependent set (or system) of national accounts emerged as early as 1941. It was proposed by two Cambridge economists Richard Stone and James Meade, under Keynes’ watchful eye, in a white paper An analysis of the sources of war finance and estimate of the national income and expenditure in 1938 and 1940 [25] and an accompanying technical article The Construction of Tables of National Income, Expenditure, Saving and Investment, published in the Economic Journal [26]. This was a landmark in national accounting, as it not only presented a set of interconnected accounts but also because they applied double-entry bookkeeping methods to national accounts. Stone and Meade effectively systematized Clark’s approach, but within a Keynesian conceptual framework (in particular, formalizing the relationships between income, output, consumption, investment, and savings). Thus, the SNA was given a theoretical basis it had previously lacked [9]. Although these first tables were incomplete, they are nevertheless considered the first SNA, providing a framework linking a coherent set of macroeconomic totals [14].

Before the end of the war, in 1944, the US, UK, and Canadian administrations began the process of negotiating a harmonized methodology for calculating their national accounts. The result was that the Keynesian model, including government spending, was adopted. Meanwhile Stone also chaired a League of Nations Sub-Committee on National Income Statistics that adopted, in 1947, the report Definition and Measurement of the National Income and Related Totals. This was the immediate predecessor of the first edition of worldwide standards for SNA, that was subsequently published in 1953 (the Expert Group convened to develop the SNA was also chaired by Stone). It is for this reason that Stone is regarded as the father of the international SNA for which he was awarded the Nobel Prize in Economics in 1984.

2.5 Global proliferation of GNP

In the aftermath of World War 2, a number of developments helped to propagate the SNA, and GNP in particular. Firstly, reconstruction aid, known as the Marshall Plan, was not unconditional to receive aid, since European states had to reach growth and development targets. The Organisation for European Economic Cooperation (OEEC), established to distribute aid and monitor effectiveness, used GNP as the benchmark measure. Masood [1] contends that the cold war that followed also contributed, as it was defined by statistics that demonstrated the superiority of capitalism and its ability to provide prosperity. Fioramonti [4: 37] concurs, describing the cold war as a ‘full-blown “stats war”.’

In time, these standards and indicators went global to meet the needs of the emerging international community for whom common standards and metrics were needed [3]. As the concept of development economics emerged and the UN began to advance development policies, many of the early leading experts came from the OEEC, bringing with them their experiences of the Marshall Plan. The first UN Development Decade (1960–1970) encouraged all developing countries to set GNP growth rate targets of at least 5 percent [28]. Early development policy also ‘had a strong political component from the very beginning’ [8: 137] as GNP was used as a tool in the armory against communism. China, the last great bastion of communism began measuring GDP in 1992 [31].

3.1 The system at large

The central framework of national accounts consists of two main building blocks: (i) the supply and use tables and (ii) the institutional sector accounts. Institutional sector accounts provide a comprehensive overview of all economic flows and positions. The supply and use framework are essentially a subsystem of the institutional sector accounts, providing more detail on the production of goods and services, the inputs needed to generate this output, and the transactions in goods and services.

3.2 Supply and use tables

The framework of supply and use tables (SUT) can be considered as the starting point for compiling national accounts. Often perceived as impenetrable and difficult to understand, perhaps owing to some of the complex intricacies applied or the sheer size and density of the tables [32]. In some countries SUT are as large as 250 columns (representing industries) and as many as 2,000 rows (representing products). Different valuations, between current prices and constant prices, and between basic and purchasers’ prices also add some complexity.

The main principles of SUT are quite simple and straightforward however. SUTs are a statistical representation of the inter-dependencies or intersectoral relationships that exist between the different sectors of the economy. They provide an accounting framework to represent interindustry flows for a given time period. SUTs play an important role in the construction and reconciliation of national accounts. They can also be transformed into Input-Output tables which provide the backbone for the analysis of the interdependencies between supply and demand of goods and services.

A supply table maps out domestic supply while making allowances for imports, margins, taxes and subsidies on products. This can be expressed so that Total supply of a product i equals domestic production, usually referred to as output, by economic activity, plus imports:

Total supply i = ∑ j = 1 n O i , j + M i

where:

•

O i , j : Output of product i produced by domestic economic activity j

•

M i : Imports of product i

A use table is a product-by-industry table mapping out intermediate consumption by industry (i.e., products used by domestic industries for the production of goods and services) – final consumption by households, non-profit organisations serving households (NPISH), gross fixed capital formation and exports (including changes in inventories). In other words, total use consists of the goods and services that are being used up in the production of other goods and services, referred to as intermediate consumption, by domestic economic activity. The following formula presents the total use for product i :

Total use i = ∑ j = 1 n 𝐼𝐶 i , j + C i + I i + X i

where:

•

𝐼𝐶 i , j : Intermediate Consumption of product i , used in production by domestic economic activity j

•

C i : Final consumption of product i

•

I i : Investments (including changes in inventories) of product i

•

X i : Exports of product i

Use tables also show the components of value added by industry i.e., compensation of employees, other taxes and subsidies on production (i.e., excluding taxes less subsidies on products), capital depreciation and net operating surplus.

For SUTs to be ‘balanced’ two critical identities must hold: (1) total output for each industry must equal total input for each industry; and (2) total supply of each product must equal total use of each product (see Fig. 1).

Aggregating the equations above for all products (m), and combining the two equations representing the identity of total supply being equal to total use by definition, one arrives at that most famous macro-economic identity [32]:

Total supply = Total use

∑ i = 1 m ∑ j = 1 n O i , j + ∑ i = 1 m M i = ∑ i = 1 m ∑ j = 1 n I ⁢ C i , j + ∑ i = 1 m C i + ∑ i = 1 m I i + ∑ i = 1 m X i ∑ i = 1 m ∑ j = 1 n O i , j - ∑ i = 1 m ∑ j = 1 n I ⁢ C i , j = ∑ i = 1 m C i + ∑ i = 1 m I i + ∑ i = 1 m X y - ∑ i = 1 m M i

Output – Intermediate consumption = GDP = C + I + X - M

To achieve this balance, differences in valuation between the two tables must also be reconciled. The output data in the supply table are typically valued in basic prices (the selling price). The uses of goods and services, as represented in the use table, are valued by the price paid by the purchaser, or – in the case of exports – at ‘free-on-board’ prices. Basic prices are transformed from basic prices to purchasers’ prices in the final columns of the supply table by taking into account distribution margins and taxes, less subsidies, on products.

OPEN IN VIEWER

Figure 1.

A balanced supply – Use framework. Source [33].

3.3 Institutional sector accounts

The institutional sector accounts provide a full overview of revenues, expenditures, and finance for institutional sectors. The following main sectors are distinguished: non-financial corporations, financial corporations, general government, households, and NPISHs. In addition, transactions and positions with the rest of the world are recorded separately. The institutional sector accounts have much in common with the profit and loss account and the balance sheet of a corporation. However, while the balance sheets are quite similar, the sector accounts group transactions in a different way.

OPEN IN VIEWER

The accounts can be broken down into current and accumulation accounts. Current accounts provide information on production, income generated by production, the subsequent distribution and redistribution of incomes, and the use of income for consumption and saving purposes (see the upper part of Fig. 2). The accumulation accounts record flows that affect the balance sheets and consist of the capital and financial account, which primarily record transactions (purchases less disposals of assets and net incurrence of liabilities), and the other changes in assets account, which consists of a separate account for revaluations and one for other changes in the volume of assets. Together these accounts represent the changes in the stock accounts, i.e. the balance sheets (see the lower part of Fig. 2).

Each account distinguished in the institutional sector accounts ends with a balancing item which is usually the starting item for the subsequent account. The balancing item typically represents the net result of the flows (or positions) recorded in the account and is calculated as the difference between total revenues and total expenditures. Examples of balancing items are gross value added on the production account and savings on the use of income account. The national totals of these balancing items often represent important macroeconomic aggregates. For example, the sum of gross value added generated in the various domestic sectors equals GDP, whereas the sum of (gross/net) primary income, the balancing item of the primary distribution of income account, represents (Gross/Net) National Income.

The institutional sectors accounts start off with a simplified overview of the production of goods and services, in the production account. It shows the output from production, goods and services used up in the production process (i.e., intermediate consumption), and the resulting value added. The following set of accounts shows the distribution of income.4

The capital account constitutes the first part of the accumulation accounts. From the perspective of balance sheets, it provides two important pieces of information that link current and capital accounts. Firstly, it shows for each sector, the balancing item changes in net worth due to saving and capital transfers, which equals saving plus net capital transfers received. The latter transfers often relate to lump sum payments by governments to corporations.5

The second piece of information that can be derived from the capital accounts concerns the acquisitions, less disposals, of non-financial assets. The resulting balancing item of changes in net worth due to saving and capital transfers minus the net acquisitions of non-financial assets, is called net lending/net borrowing. If this balancing item is positive, i.e. the sum of saving and net capital transfers exceeds the net accumulation of non-financial assets, the remaining funds are available to purchase financial assets, which ceteris paribus lead to an increase of the financial wealth of the relevant unit or sector. This is recorded as net lending. If it falls short, it is recorded as net borrowing. In the latter case, the unit or sector would need to borrow funds to cover the shortfall.

The net lending/net borrowing amount from the capital account has its counterpart in the balancing item of the financial account, where transactions of financial assets and liabilities are recorded. Conceptually the two balancing items are the same. In practice however, owing to different data sources and methods used to compile the production, income and capital accounts versus those used for the compilation of financial accounts, the items often differ from each other. These differences are referred to as statistical discrepancies.

Balance sheets show the values of the stocks of assets and liabilities at the start and the end of the reference period. They also provide insights into the financial status of a sector by illustrating how that sector finances its activities or invests its funds. A clear distinction can be made between non-financial assets and financial assets and liabilities. Examples of non-financial assets include produced assets like houses, infrastructure, machinery and equipment, and inventories, but they also comprise non-produced assets such as land, mineral and energy resources, and water resources. Deposits, shares, loans, and bonds are examples of financial assets (and liabilities). The value of the assets and liabilities at the start of a period is referred to as opening stock and at the end of the period as closing stock.

Net worth, the balancing item from the balance sheet, is defined as the value of all assets owned by an institutional unit or sector less the value of all its outstanding liabilities, and it provides insight into the financial health of a unit or sector. It is recorded, together with the liabilities, on the right-hand side of the balance sheet. In this respect, it should be noted that equity is also considered as a liability in the national accounts [35].

In the SUT, the statistical unit is the establishment.6

Not all establishments undertaking a particular economic activity are recorded in the same institutional sector. In addition to unincorporated enterprises being recorded as part of the population of the households’ sector, other establishments may be recorded either as part of (non)financial corporations, or as part of general government (or non-profit institutions serving households), depending on whether they produce market goods and services or non-market services. The distinction between market and non-market is based on whether products are sold at economically significant prices8

A more general point relates to the fungible character of income and especially finance. It can be very difficult or impossible, for example to establish a direct relationship between income and finance on the one hand, and production activities on the other. It can be very difficult or impossible, for example, to fully disentangle an unincorporated enterprise (establishment) from the household owning this enterprise, and clearly separate enterprise and household transactions and positions. The same problems often arise when dealing with multi-establishment enterprises.

The beauty and elegance of the SNA lies in its consistency and coherence, as represented by the quadruple-entry bookkeeping principle i.e. for a single transaction, four simultaneous entries are recorded in the national accounts. Firstly, the national accounts respect traditional business double-entry bookkeeping. From an accounting perspective, one can look upon national accounts as an extension of business accounting [36]. In national accounts terminology, each income or capital transaction recorded on the current or capital account has a counterpart entry in the financial account. In the case of the purchase/sale of a financial asset, or in the case of the incurrence of a liability, both entries appear in the financial account. Secondly, as the goal of national accounts is to arrive at exhaustive estimates for all economic agents on the domestic territory of a country, including the engagements of residents with non-residents, the system not only reflects the transactions (and financial positions) of a particular unit but also the transactions (and financial positions) of the counterpart unit. As a result, each transaction leads to four entries: the quadruple entry bookkeeping system.

In summary, three basic identities can be distinguished:

•

Budget identity: The traditional double-entry rules are evident in the (conceptual) equality of the balance of non-financial (current and capital) transactions and the balance of financial transactions.

•

Transaction identity: For each transaction, the sum of all receipts is by definition equal to the sum of payments; and for each financial instrument, the sum of assets is by definition equal to the sum of liabilities. In the SUT, the total supply of goods and services must equate to total use (see Fig. 1).

•

Balance sheet identity: For each balance sheet item, the opening stock plus the net purchases of the relevant item plus revaluations plus other changes in the volume of assets is equal to the closing stock. Related to this identity is the conceptual consistency between the change in net worth of a sector and the sum of the following balancing items: changes in net worth due to saving and capital transfer, changes in net worth due to nominal holding gains and losses (i.e. revaluations), and changes in net worth due to other changes in the volume of assets.

Together, these identities result in a closed and, at least from a conceptual point of view, fully consistent system. They also provide a powerful tool to check the exhaustiveness, quality and reliability of the various data sources feeding into the SNA. It can also be used to fill data gaps, whereby estimates for certain (sub)sectors are compiled as a residual. It should be acknowledged however that usually not all identities are fully respected. In practice, balancing non-financial transactions with financial transactions often proves difficult, for all or at least for some sectors. As noted above, this difference is typically presented as a statistical discrepancy [33].

4. Most recent and important revisions to SNA

Vanoli [14] identified three main challenges facing future national accounts: how to measure welfare; how to adapt to the complexities of globalization; and how to account for environmental issues and the interaction between economy and nature, and the demands of sustainability. The Inter-Secretariat Working Group on National Accounts (ISWGNA), set out a similar research agenda for updating the SNA 2008, prioritizing: globalization; digitalization; and well-being and sustainability [39]. Sustainability and Environmental sustainability is primarily addressed by the System of Environmental-Economic Accounting Central Framework (SEEA CF) 2012, and the System of Environmental-Economic Accounting – Ecosystem Accounting (SEEA EA) that was adopted at the fifty-second session of the UN Statistical Commission in 2021 [40]. The SEEA CF and SEEA EA are fully compatible with the SNA 2008, in the sense that the same principles for valuation of assets are being applied, although in the case of ecosystem accounting the asset (and production) boundary has been broadened substantially. At the fiftieth session of the UN Statistical Commission in 2019, a Friends of the Chair Group on Economic Statistics was established to review the system of economic statistics [41]. The result was a recommendation to develop the interrelationships between economy, society, and environment and address the pressing global trends and underlying risks of inequality, climate change, technological change, demographic shift, and urbanization [42].

From the very beginning Kuznets flagged various concerns with GDP, not least the inclusion of illegal activities, socially harmful industries, defence spending and most government spending. He cautioned that GDP would be an inappropriate measure of well-being, writing ‘the welfare of a nation can scarcely be inferred from a measure of national income’ [5: 29]. Such was his dissatisfaction with the final formulation of GDP that Mitra-Khan [67: 14] argues that ‘Kuznets, far from being the progenitor of GDP, was its biggest opponent.’

As the negative implications of economic growth for the environment and well-being began to emerge in the 1970s, several attempts to challenge the primacy of GDP emerged.18

In 1974 the UN Statistical Commission discussed deficiencies in the SNA from the perspective of welfare measurement, prompted by conclusions of the UN Committee of Development Planning that GDP should be supplemented by more suitable measures of economic welfare or what they termed ‘welfare oriented measures of output’ [80]. In a wide-ranging paper, the desirability and feasibility of including ‘regrettable necessities’ such as, defence spending, placing more emphasis on net measures (e.g., depreciation of capital), or in a foretaste of the challenges associated with the digital economy, how to measure free services provided by businesses were discussed. Richard Stone, the main author, did not appear to be very enthusiastic about the inclusion of household activities within the production boundary, noting ‘economic accounting becomes virtually impossible if it is insisted that economic activity is coterminous with life itself’ [81: 7]. The seeds of the SEEA are evident though, with the report noting that the Input-Output framework could be extended to deal with issues like pollution.

In 1976, the Statistical Commission returned to the topic of supplementary welfare-oriented measures to complement the SNA. The report noted the challenges in defining what exactly was being measured, and difficulties in reaching any agreement on the concept and measurement of aggregates. It also noted the difficulties in compiling the data required, which would lead to heavy reliance on imputation, and requiring ‘very considerable statistical effort’ [82: 71]. The Commission conclusions [83: 4] noted that ‘welfare is a complex concept not susceptible to measurement as a single numerical aggregate in internationally comparable terms’ and thus did not recommend any changes to the SNA. However, the Commission endorsed the proposal to establish environmental statistics, the exploration of time use statistics,19

An important country led development was the Net National Welfare developed by the Economics Council of Japan [85]. Another (unofficial) country based study was the ‘bold and impressionistic’ [82]Welfare GNP developed for the US by Sametz [86]. Another early alternate measure to GDP was the ‘primitive and experimental’ [82]Measure of Economic Welfare expounded by Nordhaus and Tobin [87].20

The beginning of the twenty-first century witnessed a renewal in the debate on the limitations of the SNA as a tool to provide adequate measures of economic performance, social progress and sustainable development. Talberth et al. [90] argued that the ‘nation’s most trusted measure of economic performance is …woefully out of sync with people’s everyday experiences.’ Islam and Clarke [91] developed a ‘cost-benefit’ adjusted GDP which they argued could be used as an indicator of social welfare. The Great Financial Crisis of 2008 only fuelled this fire [92], but so too did concerns regarding the inability of the SNA to satisfactorily capture services activities. The Economist [93: 22] declared that GDP was ‘a relic of a period dominated by manufacturing’ struggling to capture the impact of myriad intangible innovations.

Two initiatives are especially noteworthy. The first is the Commission on the Measurement of Economic Performance and Social Progress (better known as the Stiglitz-Sen-Fitoussi Commission) established in 2008 by the then president of France, President Sarkozy, to determine whether a better measure of economic and social progress could be established. The second is the 2030 Agenda and the Sustainable Development Goals [93].

The Stiglitz-Sen-Fitoussi Commission report, Mis-Measuring Our Lives, published in 2010 [95], emphasized the need to decouple GDP from well-being. Arguing that GDP provides an overly optimistic mirage, the authors proposed a shift in emphasis away from production toward well-being, with greater prominence being given to households, including distribution of income, consumption and wealth, and other aspects affecting well-being and sustainability. Conceptually, the authors built upon the Brundtland Report [96] in how they viewed sustainability. They highlighted the need to include unpaid household activities; better adjust for quality changes, especially in services; account for environmental damage and depletion; and measure both objective and subjective well-being. The authors also recommended moving away from a single index toward a dashboard of indicators.

The 2030 Agenda integrates three dimensions of sustainable development: economic, social, and environmental, embodying a vision of decision making and progress that considers all these aspects. The 2030 Agenda and the Sustainable Development Goals, although not designed as such, were interpreted by many as an attempt to move beyond GDP as it included some of the necessary elements, in particular environmental sustainability.21

7. Challenges replacing GDP

Despite the drawbacks and alternatives outlined above, GDP remains the prominent general-purpose barometer for our collective well-being and economic progress. Counterintuitively, the glut of alternatives challenging GDP’s hegemony seems only to have cemented the dominant position it enjoys. The abundance of rival indicators illustrates the lack of consensus on a suitable replacement and has arguably undermined the credibility of each individual challenger. So, while many of these new indicators may in fact represent technical progress, their sheer number might also be viewed as a metric of failure [92]. Despite all the criticisms and shortcomings of GDP, it still enjoys economic hegemony and massive cultural authority.

How might GDP, an indicator so deeply embedded in our systems and consciousness, be replaced or complemented? One approach continues to recognize the importance of GDP as a key economic indicator, but also recognizes its limitations, and consequently attempts to complement it with other economic, environmental, and social indicators to provide a comprehensive assessment of the conditions and progress [109]. This is the dashboard approach promoted by Stiglitz-Sen-Fitoussi. Some have argued that this is exactly what the SDG Global Indicator Framework does. But with 231 indicators, the Global Indicator Framework is unmanageable as a functioning dashboard and some prioritisation or parsimony would be required if a GDP+ dashboard is to work.

The other approach is to develop a single replacement aggregate index. Masood [1: 10] notes that ‘if it is true that GDP remains the only number that influential politicians, the markets, the banks, the media, and the commentators pay attention to, then the solution cannot be more alternative indicators; nor can it be a dashboard. The solution has to be to value the things that matter and then incorporate this value into the GDP.’ In other words, if we cannot wean the world off GDP, then GDP must be adapted. But Macekura [2: 9] counsels that reformers ‘should be wary of replacing one set of numbers with another’. We also have the warnings (above) against such a move from Kuznets and Hayak.

To complicate matters, many of the debates suggest that the SNA is not well understood. This manifests itself in two ways. Firstly, the SNA, and GDP in particular, is criticized for not adequately measuring things it was never designed to measure. Even Stiglitz-Sen-Fitoussi, noted that ‘GDP is not wrong as such, but wrongly used’ [95: 3]. A further challenge is that apparently the mechanics and intricacies of the SNA and GDP are not well understood by anyone other than the compilers [127]. Practical experience shows that even specialist users of national accounts data hardly know the intricacies of the system, what and the reason why something is included/excluded or the relationships between the various indicators that can be derived from the system of national accounts. Perhaps in the past, no-one else needed to understand the mechanics, but now, if we are to move beyond GDP, the strengths and weaknesses of the alternatives must be understood by decision makers so that they guide those decisions.

In addition to the temporal changes to the SNA, a further challenge is that the SNA and GDP are not always measured consistently across countries. In theory, GDP is calculated using a cocked hat of three different approaches: income, expenditure and production. But as Table 1 illustrates, just over half of countries or territories have the capacity and sufficient data to adopt all three approaches. Furthermore, twenty percent of countries still rely on one approach only – typically the production approach. By 2023, two thirds of countries or territories around the world had adopted the 2008 SNA. A small handful of countries are still compiling their accounts in accordance with 1968 standards. At first glance this may appear a bleak assessment, but continual improvement is obvious. Since the previous UN report [128] in 2020, an additional 25 countries have adopted the 2008 SNA, and more impressively, 22 additional countries employ all three methods of calculating GDP.27

More broadly, there have been concerns expressed regarding the quality of GDP estimates around the world. Seers [130: 21] asserted that ‘decimal points in a developing country’s GDP are a “fantasy”’. Perhaps, but this is probably true of many statistics, not just GDP, and not just for developing countries. Jerven [131, 132] has been especially and vocally critical of the quality of GDP estimates for African countries. Deaton [100: 46] too has cautioned that ‘African data should be treated with a good deal of caution’. This is undoubtedly true but as noted above, steady progress is being made to improve national accounts estimates in Africa and throughout many low- and middle-income countries, not just OECD countries.

At the time of writing, there are two important initiatives underway with relevance to GDP and the SNA. The first is the revision or update of the SNA 2008, with the objective of having updated international standards in 2025. The second is the recent UN initiative with regard to Beyond GDP.

GDP and the SNA emerged from the great Depression and World War 2. While the construction of today’s SNA still reflects decisions from that time, it has not remained static but has evolved considerably over the past 70 years. Since adopting the SNA 1953, three updates have been agreed: 1968; 1993; and the 2008 versions. Currently, a new update is underway, scheduled to be finalized in 2025. Continued development is anticipated, notably around digitalization, globalization, informality, well-being and sustainability.

The SNA is much more than GDP. It is a comprehensive system from which a variety of macro-economic indicators can be derived, not only GDP but also among many others: GNI; household (adjusted) disposable income; household final consumption and saving; corporate profits and balance sheets. So, while GDP may be the best known indicator, it is not necessarily the most important indicator from the SNA.

Criticisms of GDP are longstanding, but there is a growing consensus that it no longer meets the needs of today, and ‘is showing signs of age’ [3: 7]. The criticisms of GDP and the SNA today, largely reflect or mirror many of the debates and concerns expressed about GDP since its creation and are well captured by the Statistical Commission debates of the 1970’s and again by the Stiglitz-Sen-Fitoussi Commission report. The recent UN reports and policy briefs have again rehearsed these arguments and put forward suggestions.

GDP will prove difficult to replace however – it is buried deep within our political, economic and cultural systems and collective consciousness. It has transcended beyond a measure of economic progress to play a key role in the global, and many regional, governance systems. The move from a single number to a dashboard will be unattractive to many. As Pilling notes [31: 285] the ‘genius of GDP is that it somehow manages to squeeze all human activity into a single number.’ The question is whether it is realistic to try and squeeze even more issues into that number or if it should be complemented with other strong indicators?

To move beyond GDP, a reconceptualization of progress will be required. A fundamental tenet of that reconceptualization is the incorporation of sustainability i.e. not maximising benefits today at the expense of tomorrow. With that in mind, in seems fitting that the last word be given to the younger generations. A youth essay competition, hosted by the SDG Lab together with Rethinking Economics International and UNCTAD, on Beyond GDP inspired 630 young students and researchers to write about what should be counted in the future [137].

Among the winners, Holm argues we should ‘dare to tell a new story of the good life, and grapple with new ways of measuring that go beyond merely our level of economic, bodily, intellectual, social and natural resources but towards measuring the quality of our relationship to the world’ [137: 31]. She calls for ‘a relational conceptualisation of well-being, where our relationships to nature are seen as inherently connected to our own well-being…to overcome the false dilemma of balancing human well-being and natural well-being as two opposite interests – because we will start seeing them as inherently interconnected.’ Aboderin argues that any framework ‘must prioritize inclusivity and equity’ and ‘must be environmentally sustainable to ensure that future generations can continue to thrive and enjoy those resources in abundance. This means promoting sustainable farming practices, protecting our forests and water sources, and mitigating the impacts of climate change [137: 28]. Drayak called for an economic framework that is human rights based, embodies economic, social, and cultural rights (ESCR) and supports freedom of choice. In a very enjoyable essay inspired by FIFA video games, Barbieri proposes a ranking system he calls a ‘General Wellbeing Rating’ [137: 17]. based on five categories: ecological sustainability of an economy; a revamped measure of production that would properly evaluate genuinely productive industries rather than predatory or value-inflated ones; a bare minimum indicator based on the basic needs of an average person; good governance; and opportunity. Vicente notes that ‘The current System of National Accounts presents limitations by not adequately including unpaid household work and care tasks, distorting the understanding of economic processes and hindering comparisons of GDP between countries with different levels of development’ [137: 35].

Several authors recognised that moving beyond GDP is not only a measurement task, but more fundamentally, is a reconceptualization of our path to development and progress. Noted by Ahmad in her essay ‘The pressing challenge is not in lack of ways to account for our collective wellbeing. The challenge lies in developing the will and courage to admit that no single person, specie, or nation is above others’, she continues [137: 23]. This final point is critical. It is tempting to discuss GDP and beyond from purely technical or statistical perspectives but this would be a mistake. First and foremost, this is a political challenge. Politicians and citizens around the world must decide whether they are really ready to move beyond GDP and whether they are prepared to live with the implications that follow.