hroughout the 20th century, Gross Domestic Product (GDP), the monetary value of goods and services produced within an area in a given year, has been used to determine the international economic hierarchy. For instance, the difference between a developed and a developing nation is based on GDP. Furthermore, GDP is the top metric that a country can use to achieve global influence. However, there is a growing debate as to whether GDP is a sufficient gauge of economic performance. In fact, the metric does not account for all the gains and losses in an economy. For example, it disregards the exchange of goods and services through bartering, a system used by many countries for most of their economic activity. On top of that, it is questionable as to how rich an emerging market is if most of its GDP is spent on fixing the environmental destruction brought on by its growth. GDP came about in the 1930s when industrialization was not disputed and environmental and social concerns were not as pervasive as they are today.
Some experts and policy makers are calling for a move away from using GDP as such a crucial and exclusive criteria. Such a move could also change the international ranking of countries that have the most global influence, as those with better well-being indexes (i.e. sustainability, equity) could surpass the more traditional powers. Moreover, the IMF predicts that the world is headed for an extended period of stagnant economic growth, expecting trade to contract, thus making GDP even less relevant. Overall, the countries with better well-being evaluations would be more adept at confronting global challenges in the future than those who rely exclusively on GDP measures.
Looking Beyond GDP as the Measure of Success on Bloomberg