By Amin Kef Sesay
The latest macroeconomics figures released by the Bank of Sierra Leone shows that the country would experience a low growth rate of about 2.2% this year – Not enough to address the many aspects of poverty in the country in any significant manner without huge external borrowing. The only medium to long term solution is how to increase GDP growth to 10% and above sustainably till the end of this decade.
Monetary economists hold the view that an increasing GDP is a measure of welfare and economic success. It was at the 1944 Bretton Woods Conference that GDP became the standard tool for measuring a country’s economy seen in the accumulation of wealth and production of goods and services.
Economic growth assesses the expansion of a country’s economy, measured by policymakers and development partners by increasing Gross Domestic Product or GDP. This indicator estimates the value added in a country which is the total value of all goods and services produced in a country minus the value of the goods and services needed to produce them. It is common to divide this indicator by a country’s population to better gauge how productive and developed an economy is – the GDP per capita.
However, let us hasten to state that GDP is not, on its own, an adequate gauge of a country’s development; as development is a multi-dimensional concept, which also includes social, environmental, and emotional dimensions. GDP growth is only beneficial to a country when it is inclusive and sustainable in the form of more and more people getting employed, incomes increasing, and more social welfare goods and services provided for the people by the Government.
When GDP grows, it becomes incumbent on the Government to distribute its gains equitably in the form of: Increasing the public provision of goods and services, a robust social safety net and progressive taxation of income and wealth.
If left unchecked, growing inequalities cannot only slow down growth, but also generate instability and disorder in society, posing a threat to the very foundation of democracy and human well-being. The consequence of the rich accumulating ever more capital and wealth is that economic and consequently political power becomes increasingly concentrated in the hands of a wealthy few.
The Human Development Index
Thus, on 11th October 2018, the World Bank launched the Human Capital Index (HCI) which ranks 157 countries’ performances on a set of four health and education indicators according to an estimate of the economic productivity lost due to poor social outcomes.
It is expected that mainly developing countries will make use of the HCI in order to quantify the results of social sector investments, thus increasing spending on human development (health, education, social security, etc.), which the World Bank argues have been forgotten at the expense of infrastructure and institutional development.
An expanded indicator, which attempts to measure the multi-dimensional aspect of development, is the Human Development Index (HDI), conceived by the United Nations Development Programme (UNDP). This is calculated through a geometric mean of GDP per capita, life expectancy at birth, and the average between mean years of schooling and expected years of schooling.
The SPI is a refinement of the HDI because it expands the number of composite indicators from only four to fifty-four in a wide array of areas, including basic human needs, foundations of well-being, and opportunities to progress.
For example, access to water and sanitation, educational and health outcomes, public criminality, housing, access to information, and communication.
The view underlying the SPI is its conceptualization of economic growth as not an end in itself, but rather, an effective means of expanding personal and societal freedoms – the impact it has on people’s lives. For example: Political liberties in the form of freedom of expression and free elections, Government transparency and accountability, Personal security/safety and Access to economic opportunities such as participation in trade and production.
In this light, development consists of the elimination of deprivations of liberty that limit the choices and opportunities of persons to live better lives.
