The Beyond GDP approach considers GDP (gross domestic product) insufficient to capture the multidimensional nature of progress and promotes the use of alternative indicators in policy. Although commonly used as an indicator of well-being, GDP is a measure of economic performance, reflecting production expressed in monetary terms. It does not account for social and environmental costs, nor does it reflect social and territorial inequalities.
The recent crisis revealed that GDP figures alone can mask problems accumulating in the economy. Alternative indexes can enhance monitoring and guide policies towards balanced economic, social and environmental goals. The choice of indicators matters, as this has an impact upon policy design, monitoring and evaluation. To date a variety of alternative indicators have been developed by international organisations, statistical offices and NGOs (for instance, the Human Development Index and the Ecological Footprint) and are increasingly being used in policy-making, including at EU level. At the regional level, versions of global indexes exist alongside regionally designed indexes, but the availability and reliability of data requires improvement.
In the EU context, the ‘Beyond GDP’ debate has been re-ignited in connection with the current reflection on the post-2020 cohesion policy framework. Additional regional indexes, such as the EU Regional Social Progress Index released in October 2016, can help support result-orientation, improve monitoring performance and enable a more comprehensive assessment of territorial development. This is an update of an earlier briefing published in February 2016.
What is GDP?
Gross domestic product (GDP) is a monetary measure of economic activity, which captures the value of goods and services produced by an economy during a given period, typically a year or a quarter. As it measures economic output expressed in monetary terms, it allows the estimating of economic performance and to measure the size of an economy.