Gross Domestic Product (GDP) / Growth
What counts, what doesn’t count, who’s doing the counting, and what are the data used for? After an introduction to the basics using ‘chapters’ from the Who’s Counting? video, this session explored the current status of national income accounting, the best questions feminists can be asking, and the best strategies to adopt. A summary prepared by AWID staff of the issues raised in the economic toolbox session “Gross Domestic Product (GDP) / Growth” at the 2012 AWID Forum is included below.
Speakers: Marilyn Waring (Auckland University of Technology)
Marilyn Waring is a New Zealand feminist activist and political economist. Elected to parliament at 23, she chaired the Public Accounts/Expenditure Committee. Marilyn’s work Counting for Nothing/If Women Counted is a feminist economists classic. Further information and background on Marilyn’s life and work is available in the film Who’s Counting? Marilyn Waring on Sex, Lies and Global Economics.
Top Ten Things you should know about Gross Domestic Product
1. Gross Domestic Product (GDP) is the main tool used to measure the economic growth of a country, which is used by investors to assess how/where/whether to invest.
- In theory GDP is a universal measurement developed to compare countries internationally to determine their relative potential for growth.
- GDP is also a significant factor that is used as data in the strategic decision making of policies in a country.
2. The system for measuring GDP known as national income accounting is such that activities can be measured as “growth”, even if they have no actual benefit to the community or the country.
- GDP only measures the monetary value of goods and services and considers where monies are being generated and spent without taking into account the value that unpaid work (usually done by women) contributes.
- National income accounting doesn’t have a debit side so as long as the activity passes through the market it is good for growth.
-If an oil tanker loaded up on oil in Alaska, to be discharged down the coast and then discarded the oil in a bunker it would have been responsible for moderate growth. But for example, in 1989, when the Exxon Valdez oil tanker rammed into an iceberg, it was fantastic for economic growth. This incident lead to a number of economic activities that passed through the market including insurance payments, purchase of a new tanker, civil and criminal legal proceedings, clean up operation, compensations (people, tourism), film, television and book rights, and an influx of subscriptions/donations to “green” companies. The loss to the country, the natural world, and individuals in never accounted for in national income accounting.
– Private businesses would never use an accounting system like this to determine their success.
3. The study of Economics includes pretensions of being concerned about the wellbeing of the community.
- The word Economics comes from the Greek oikonomia meaning “management of a household.”
4. While it is also used to make major strategic decisions about national policies affecting every one, GDP was initially developed to justify war expenditures.
- In World War II, Economist Richard Stone developed a system for collecting and analyzing data of the British national accounts at a time when the government needed to justify the expenditures on arms and the war effort. The development of the UN, as well as the work by colonial powers to determine which investments to keep from their previous colonies, gave rise to the use of this system growing internationally.
5. When a country is at peace the GDP goes down, consequently there is an economic benefit to activities of war.
- War leads to increased public spending which increases GDP, with no accounting for the loss to the country. For example, the production and selling of nylons contributes less growth than using the same material to produce parachutes during a war. The government would buy the parachutes at a higher cost than the private sector would pay for the nylons. This increased public spending would contribute to increased growth. Those producing the parachutes would have a higher wage and the volume purchased would be greater because it would be based on public wartime demand as opposed to private demand.
6. The production boundary is a set of rules that has been developed (and only moderately revised) via the United Nations that sets out activities that are counted as contributing to the GDP.
- When Richard Stone wrote the rules for national accounts he developed a framework to define which activities would be recorded in the accounts, known as the production boundary.
- These are the rules that dictate what is counted when measuring GDP and thus growth.
7. Because unpaid work, traditionally carried out by women, is not deemed to have monetary value, it is not counted in the economic system, and is considered non-productive.
- An alternative data set could include time: time is the primary thing we have to exchange. Time use surveys in Pakistan immediately show lifestyle discrepancies between women and men. Typically in a day, men engage in 5 different activities whereas women do a dozen. Women’s working hours tend to be longer than men’s. In terms of practical applications, the activity that took the most time in a day was cooking and food preparation, which took about five hours, due to the inefficiency of their stoves. This indicates that to increase the productivity of the villages surveyed, the best technology change lies in cutting down that time through more efficient stoves.
- When Marilyn Warning assessed the work days of young women in the communities she visited all over the world, she found that many of them worked 18 hours per day. However economically this is not calculated in a way that demonstrates how it contributes to the community, these hours are called non productive and are not counted.
8. The benefits of our natural world are not counted in terms of the value of the water we drink, the air we breathe and the food we farm when done for subsistence (and consumed by its producers. Food that is farmed is counted when it is sold on the market.)
- The environment only counts from an economic perspective when we are marketing it (when we are mining it, cutting it down, or deteriorating it in some way for consumption in the market.) The UN has attempted to make the environment more visible by commodifying it, through an environmental accounting framework satellite of GDP, which calculates the value of things like forest cover, indigenous growth, air purity etc. This provides a framework for a cost-benefit analysis by working with market figures, reducing the natural world to a lowest common market denominator. Fortunately, they have not come up with an estimate for the value of water.
9. GDP is based on a one-size-fits all solution and the portrait it paints of a country’s well being does not reflect the lived realities of people and the planet.
- Every one, including feminists, need to be aware of the implications that generalizations and universal measurements have and how they affect the analysis and discourse. For example, some feminists have used the term “care” to describe all unpaid work that women do. In order to have the most impact, our discourse needs to account for the fact that women do a lot more than that.
10. A realistic measurement of the living conditions in a community/town/city/region/state/nation and their relative improvement (and opportunities for such) can be achieved through a human rights approach, which is individualized based on the priorities of that geopolitical area.
- In order to advance women’s rights vis-à-vis a rights based approach for use in strategic policy making, we don’t need to develop a system that provides the capacity for international comparison. Data and its collection should be a tool used to assess the unique priorities of a geopolitical area, where the priority area for growth dictates the system used for measurement.
Download Commonwealth Secretariat Discussion Paper 13, April 2012
Social Protection: A question of delivering on rights and resources
Dr. Anit Mukherjee & Dr. Marilyn Waring
AWID International Forum, Istanbul Turkey (April 21,2012)