Living Standards Better Growth Gauge Than GDP, Davos Forum Saysby
World Economic Forum finds median incomes declining widely
‘Insecurity’ of economies is causing voter frustration
Developed and developing countries alike should emphasize living standards over absolute growth as the best measure of economic performance, according to the organizers of the annual World Economic Forum.
Per-capita median incomes declined by 2.4 percent between 2008 and 2013 across 26 advanced economies, the forum said in a report released Monday, highlighting the "insecurity and inequality accompanying technological change and globalization." Countries should gauge their economic progress based on "inclusive development" and increase spending on programs like job training to ease the burden of inequality, the report said.
"Most countries are missing important opportunities to raise economic growth and reduce inequality at the same time," the WEF said, saying that measurements such as life expectancy, productivity and poverty rates should be the priorities for economic policy making to prevent further declines.
Inequality and the frustrations of those who feel left behind by globalization will be one of the main topics of discussion at the forum’s annual meeting in Davos, Switzerland, which begins on Tuesday. The gathering of political leaders, corporate executives, investors and academics has been at the forefront of advancing the economic integration opposed by U.S. president-elect Donald Trump as well as European populist parties, a tension that will be obvious at this year’s event.
In the WEF’s ranking of 29 advanced economies’ performance on inclusive development, Norway, Luxembourg and Switzerland took top honors, with the U.K. coming in 21st and the U.S. 23rd. More than half of the 103 countries measured saw their scores decline over the last five years.
To reverse slides in living standards, the forum said governments need to prioritize education, gender parity and smoothing the transition from school to work, as well as expanding infrastructure. Additionally, it said economic integration should be re-focused to emphasize making it easier for companies to trade within countries as well as between them, particularly for small and medium-sized firms.
For more on Davos, see our special report on the World Economic Forum 2017.