National Economic Indexes Aren't Enough

NEW initiatives are emerging in Venezuela and other countries which seek to redefine ``progress'' and clarify the crucial difference between money and wealth. These initiatives involve reformulating national accounting indexes, such as Gross National Product (GNP) - and supplementing them with monitors of the human, social, and environmental costs of a single-minded pursuit of GNP-measured growth. Also factored in are the child mortality and malnutrition aggravated by the ``adjustment policies'' prescribed for indebted countries by the International Monetary Fund (IMF).

These new social indicators stress participatory, ecologically-sustainable development strategies. They are pioneered by Venezuela's President Carlos Andres Perez and the South Commission - a group of political leaders from countries in Latin America, Asia, Africa, and the Central American and Caribbean regions.

Mr. Perez, who co-chairs the South Commission, also convened a recent meeting of experts from Asia, Africa, Central and Latin America, Europe, North America, and the United Nations. The meeting was hosted by Venezuela's International Institute for Advanced Studies (IDEA) in Caracas, July 31 to Aug. 3, 1989.

Today, alternatives are emerging in many countries beset by poverty, illiteracy, and homelessness - as well as environmental threats such as acid rain and desertification. Such problems have already caused West Germany, France, and Norway to think about factoring in the larger costs of progress. The growing power of the Green Party in West Germany recently led to the announcement by the Bonn government that it would, by the mid-1990s, include environmental costs in its national accounts.

The Caracas meeting was more comprehensive. It called for international comparisons of social indicators already available - such as infant mortality, low birth weight, and malnutrition that can alert countries to conditions now often worsened by IMF adjustment policies.

Second, the Caracas group urged that deficiencies in GNP be improved by reformulating statistics already available. Included: Income and wealth; poverty gaps; work in the home, whether paid or unpaid; data that highlights self-employment and family enterprises; a ratio of GNP to energy-use to determine efficiency of production, delivery, and recycling; the ratio between military and civilian costs; the status of the infrastructure; the status of natural resources.

At least two environmental indicators were recommended: Depletion (such as land destroyed) and pollution.

The Caracas group reviewed the Perez proposal and global research found in the 1989 UN Handbook on Social Indicators.

Indicators of progress in such areas as health, education, shelter, income distribution, democratic participation and environmental quality, are in use in many countries. However, they are almost never related directly to economic indicators, such as GNP. That practice supports an ``economism'' worldview that dominates global debates about development.

The Caracas meeting concluded that this ``economism'' paradigm has failed: European and Northern Hemisphere development is non-repeatable. Further, during the 1980s, ``economism'' has gone into reverse in many Southern Hemisphere countries - producing debt, famine, and ecological mayhem.

True, GNP and other major indicators aren't supposed to measure welfare. Yet the power of statistics is great. When disseminated by media they can distort.

The power of statistics to misshape came up at a recent American Statistical Association meeting. ASA director Barbara Bailor discussed how ``statistics affect all of our lives'' by focusing on GNP, inflation, and interest rates - rather than human, social, and environmental issues.

This circular process is amplified by the workings of global electronic trading and financial systems. Speculators and arbitrageurs look mainly to indicators like the new ``country risk index,'' which is even narrower than its name - ``Ability to Service External Debt'' - suggests. The artificial split between economic indexes, and human and social indexes is ongoing. It's due to overspecialized statistics.

Last, the Caracas group called for country-specific indexes in such areas as health, shelter, education, democratic participation, and the status of women. These should be released to the media with the same regularity as GNP figures. The indicators should be tailored to the specific countries and their goals. They should be gathered with the countries participation, to provide feedback.

The South Commission has scheduled a follow-up meeting in April 1990.