ISLAMABAD: The World Economic Forum (WEF) has developed a new metric of national economic performance as an alternative to GDP that also focuses on the living standards of the people and future proofing of economies.

The ‘Inclusive Dev­elopment Index’ released on Monday shows that economies were prioritising policies that support shorter growth over inclusion and sustainability, despite concerns about social inequality.

Rankings of 103 countries show which ones have the best combined performance on growth, equality and sustainability.

Over the past five years, despite a growing world economy, social inclusion has fallen or been unchanged in 20 of 29 advanced economies and intergenerational equity has deteriorated in 56 of 74 emerging economies.

Country profile of Pakistan shows an upward trend in five national key performance indicators which are: growth and development, GDP per capita, labour productivity, healthy life expectancy and employment. Poverty rate was declining but net income inequality and wealth inequality were growing. Public debt in terms of GDP was also increasing.

Decades of prioritising economic growth over social equity has led to historically high levels of wealth and income inequality and caused governments to miss out on a virtuous circle in which growth is strengthened by being shared more widely and generated without unduly straining the environment or burdening future generations.

The Inclusive Deve­lopment Index is an annual assessment that measures how 103 countries perform on 11 dimensions of economic progress in addition to GDP. It has three pillars: growth and development; inclusion; and intergenerational equity — sustainable stewardship of natural and financial resources.

According to this year’s index, over the past five years, the 29 advanced economies included in the study have on average flatlined in terms of inclusion, which is measured by median household income, poverty, and wealth and income inequality, despite boosting their growth and development score by over 3 per cent.

The four indicators that make up the index’s growth and development pillar are: GDP per capita; labour productivity; employment; and life expectancy.

Published in Dawn, January 23rd, 2018