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Time to dump GDP? WEF reveals new ‘inclusive development index’: SA ranks 69

BIZNEWS / 23 JANUARY 2018 - 16.15 / STAFF REPORTER

DAVOS — Numerous countries’ obsession with measuring success with GDP has created a skewed situation in which income inequality has, ironically, grown. This is the view of the World Economic Forum, which further says that a new measure is needed to indicate whether growth is leading to broader equality and improved quality of life for households. It’s unclear whether countries will rapidly start looking to the WEF’s new ‘Inclusive Development Index‘.

But the idea behind it certainly will resonate in a country such as South Africa. According to the WEF’s new index, South Africa ranks just 69. A report on the index goes on to say what many South Africans already know — that the country has a major inequality problem. The report notes: “South Africa has yet to develop a more inclusive growth model, providing better employment opportunities to a larger share of its population.” One hopes that the likes of Cyril Ramaphosa (who is leading the SA team in Davos) will take notice of this poor state of form. He has a huge job on his hands if he wants to help more South Africans climb the income ladder. (In the below post, I’ve also posted a paragraph from the report that details why South Africa is ranked just 69 in the world.) – Gareth van Zyl

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South Africa is 69th, but has improved slightly from five years ago. Despite South Africa’s economy being more advanced than that of most emerging economies, its low employment levels, subpar health conditions, and high inequality drive its low overall IDI.

More specifically, despite some improvements, South Africans have a healthy life expectancy of only 54 years, one of the lowest levels among countries with a GDP per capita of at least $5,000. When it comes to inequality, the South African economy is quite concentrated in terms of both wealth (86.7) and income (57.7). At the same time almost 36% of the population is poor and lives with a median consumption level of about $5 per day. In addition, South Africa’s economy is also relatively carbon intensive.

On a more positive note, South Africa is more productive than the average emerging country, has better control of public finance (debt is roughly 50% of GDP), and has a good balance between elder and younger populations, with a dependency ratio of 52.4. Being particularly penalized by its employment, health, and inequality levels, South Africa has yet to develop a more inclusive growth model, providing better employment opportunities to a larger share of its population.

Davos-Klosters, Switzerland, 22 January 2018 – Decades of prioritizing economic growth over social equity has led to historically high levels of wealth and income inequality and caused governments to miss out on a virtuous circle in which growth is strengthened by being shared more widely and generated without unduly straining the environment or burdening future generations.

These are the findings from the World Economic Forum’s Inclusive Development Index 2018, which is released today.

Excessive reliance by economists and policy-makers on gross domestic product as the primary metric of national economic performance is part of the problem, since GDP measures current production of goods and services rather than the extent to which it contributes to broad socio-economic progress as manifested in median household income, employment opportunity, economic security and quality of life.

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LINK : https://www.biznews.com/wef/davos-2018/2018/01/22/gdp-wef-inclusive-sa-ranks-69/

Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER

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