Why we need to stop celebrating GDP growth
We need a better measure for economic growth

Music has the Grammys, football has the Ballon d'Or, and economies have GDP growth announcements.

Though it lacks the pomp of the Grammys or the controversy of the Ballon d'Or, the (quarterly) announcement of economic growth figures is arguably the most important news in a country. And like the other two, GDP growth statistics have taken on a life of their own, evolving way beyond their initial design or intention, and may soon cause more harm than good.

 

Some takeaways:
 
  • GDP as a measure of economic well-being is flawed. One of GDP's problems is that it does not consider inequality or changes in the quality of goods and services. It treats everything produced as neutral, whether radios or rocket launchers, and does not consider production costs.

  • The Niger Delta tragedy is one of many stories of places, industries, and people left behind in the slavish pursuit of GDP growth. In optimising for what we measure (oil production and economic growth), we dedicated very few resources to preserving the other things that matter (environmental and social prosperity in the Niger Delta).

  • In releasing ourselves from a GDP fetish, the ideal solution would be to move towards a set of independent indicators that separately capture the dimensions of economic and social issues that we care about as a society.


A few weeks ago, the National Bureau of Statistics (NBS) came out with ostensibly good news: between July and September, the Nigerian economy had grown by 4% compared to the same three months in 2020. This followed a similar 5% year-on-year GDP growth in the second quarter.

The reaction was broadly positive. Nigeria's economy was growing well again. Nature is healing.

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Michael Famoroti

Michael Famoroti

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