Dear Prof. Arvydas Guogis,

Let me provide you the definition of GDP from Wilson etc (2007).

Specifically, the GDP is:

‘‘the sum of the gross value added by all resident producers in the economy plus any product taxes and minus any subsidies not included in the value of the products. It is calculated without making deductions for depreciation of fabricated assets or for depletion and degradation of natural resources. Purchase power parity (PPP) GDP is gross domestic product converted to international dollars using purchasing power parity rates. An international dollar has the same purchasing power over GDP as a U.S. dollar has in the United States’’ (World Bank, 2005)

GDP is not enough to evaluate the economic growth per given country.

GDP doesn't deal with environmental resources.

As we are familiar with the concept of limits to growth from Environmental Economics, natural resources are really restricted. Therefore, when we speak about the economic growth, 3 areas must be included such as society, economy and nature, involving Biodiversity concept.

Economic growth is a new idea of sustainable development. My main proposal for SD is composite appraising supportive progress (CASP).

My published Article: A Model for Incorporated Measurement of Sustainable Development Comprising Remote Sensing Data and Using the Concept of Biodiversity. Azniv Felix Petrosyan, Journal of Sustainable Development. Vol.3 No.2 2010: 9-26, where 3 dimensions of society, economy and nature with 6 themes each are presented in Petrosyan (2010). Currently, I am working on 12 sustainability indices highlighting that CASP is the tool to evaluate the economic growth.

With best regards,

Dr. Azniv Petrosyan

The GDP and Poverty are too opposite poles. At the macro economic data the per capita income rises due to increase in GDP. But thats not factual its representative data. The poverty is result of poor distribution of resources both economic and natural. Economics as a stream has poorly modelled the development since they rarely accounted the Human Development Index. Poor HDI is also indicator of poverty of the region, the people who do not access to the facilities, do have poor health and education. Similarly having poor opportunity to raise their income, even if they some how raise their income they are unable to purchase due to increased cost of living. Its chase of poor people which they tend to fall back due to poor access. In no case the macro GDP improvement is going to affect the poverty unless there is distributive justice of income. A progress for the few or small percentage of population cannot make a dent on the poverty figures. If we try to reduce the poverty through investment in sectors the growth of GDP might suffer, hence cycle of poverty

Nobel laureate economist Simon Kuznets addressed this issue long ago. You can take a look of his famous Kuznets Inverted U curve.

Dear Hon-Kwong Lui,

Thank You for Kuznets curve, but this was not my aim of the question. I know that. I am simply complaining that fast GDP growth in my country does not reduce poverty. And searching for other such examples in other countries. This has much to do with nowadays rhetoric of all inclusive capitalism.. Historically I see the discourse of this topic moving from equality seeking (communism), inequality diminishing (welfare state), social exclusion (neo-liberalism) and present inclusive capitalism. Am I right with such stages?

Many researchers provide evidences to refute Kuznets Curve but his work deserves serious reading. I live in Hong Kong and we experienced similar problems as in your country. BTW, in a recent monograph, I tried to identify the causes of the widening income distribution in Hong Kong and the full text is widely available in major electronic databases. Unfortunately, I am unable to find any panacea.

Wealth distribution mechanisms should be used to achieve a reduction in the poverty levels. For example, an increase of wages in the public sector may be one notable example.

Hi,

Growth, if and only combined with benefit distribution, can reduce poverty. India sometime had growth with zero poverty reduction, primarily becoz of unequal distribution effects. And poverty, by definition, is hard to measure since it involves with multi-dimensions. Crude measures like Head Count Index would not be much convincing, and the poverty line criteria has many drawbacks. It depends what a country defines as poverty, at last..........................

Inclusive development is the term often used to bring the concept of distributive justice of economic investments. But, this also means concentrating on the basic needs of the majority as well as poor. The needs for water, sanitation and housing is fundamental requirement of the poor. The countries even with medium GDP can contribute towards the basic needs which facilitates the poor to improve their performance by having better health. GDP led by the capital is often least concerned with poverty where only those with some better means can participate. The poor are not the consumers for the capitalist hence they lack desire to contribute towards the improvement directly. Governments through better tax regime should target the poverty related programs. But rigid tax regime have negative impact on GDP when the investors do not like to pay for the public. They would invest in places where there is poor or free tax regimes. Thus, its the responsibility of the governments to work for the facilitation for the improvement of poor and target the development programs which encourages there participation. The doors for the inclusive governments needs to be opened along with high growth which might facilitate investment by the governments.

Arvydas,

I agree with Kumar on the point of inclusive economic growth and development. I am not sure but the Scandinavian economies seem to run something similar to that. Do not forget that the state of the very active poor does not remain stagnant when given opportunities to move to higher income brackets. Well articulated and thought out inclusive economic growth and development models tend to uplift the most active poor segments of society to higher income levels. This is not exactly the welfare state. Take for example where (in a fast growing economy) the State subsidizes access to Specialized Tertiary Education, ICT Skills acquisition, Maternal Reproductive and Child Health, Clean Drinking Water, Microfinance Loans, Adult Literacy Education, etc, to the active poor. This implies the probability of economically empowering the active poor increases tremendously. What is wrong with that??? How have the Scandinavians attempted to minimize these inequalities in general??

Barnabas Kiiza

Dear all,

I do not see serious political forces to fight against poverty. As socialdemocracy is exhausted, who can do that now? Or, may be, You believe in the revival of socialdemocracy?

Yours truly,

Arvydas

Just to back Mr. Kiiza, In Kenya, a small percentage of the bourgeoisie contribute a higher percentage to the GDP as compared to the proletariat who are the majority with little income....I think that GDP growth can affect the poor masses positively if welfare policies are effected in the nation- like the Soweto electrification and water supply efforts in S. A during Hon. N. Mandela Regime...the proceeds should at least be used to increase the happiness index of the absolute poor.

Yes, GDP growth is really not a direct indication of poverty reduction. Economic growth in many developing countries, including in India has often been accompanied largely by increased income inequality among the people. Poverty lines based on the ‘cost of basic needs’ or the more vehemently argued actual food intake in terms of kilocalories per person per day have all been questionable, if the GDP increase does not increase meaningful jobs for the populace. But with technological advances resulting in ‘skewness’ of job creation with a small portion of the populace reaping richer benefits leaving a vast majority far behind, increasing the digital divide.

David Bollier in his Power Curve Society addresses this growing concern about the technological displacement of jobs, stagnant middle class income, and wealth disparities in an emerging "winner-take-all" economy, making the society to move from the generally expected normal Bell Curve distribution of wealth and income to a more skewed Power Law curve where there are a relative few at the top and a gradually declining curve with a long tail of relatively poorer people. One should read this compelling book by David Bollier.

For example, in India, more than 50% of her 1.2 billion people depend on agriculture which contributes to less than 15% of the GDP, while less than 20% of the people involved in services sector contribute to around 55% of the GDP. Obviously, the agricultural farmers are poor, competing to share smaller piece of GDP bread, while their service sector counterparts in the IT sector enjoying vulgar richness. It is said that more than 15000 farmers commit suicide every year in India due to poverty and it has seen a marked increase since early 90s when the economic liberalisation took roots in India. Food security bill and the subsidy regime for equitable wealth distributions are resultant out of this grim situation. Creating more jobs is considered to be the need of the hour. Dr MS Swaminathan advocates “More jobs per drop’ taking the cue from the FAO slogan of ‘ More crop per drop”!! But, how do you create more jobs commensurate with the advances in technology taking away jobs? Will ‘’manufacturing sector’ become the next target for mass unemployment? What will happen to this sector when technologies like 3 D Printer becomes more easily accessible?

Dear discussants,

I agree fully with Your comments. Considering 3 D Printer or other inventions of such type, I am afraid, it is really a very big threat for more traditional future manufacturing development. and working places.

It depends on the quality growth that is not raising inequality to yield high poverty elasticity. The challenge lies in how to avoid existing growth path that is jobless , voiceless, ruthless, futureless !  

It is really a perfect question which appeared yet here in Armenia during conferences perfomermed in 2014. Some scientists from Germany, Spain etc. were considering the economic growth of the country depends on GDP. I made an opposition that economic growth or sustainable development is computed or rated as per concept of sustainable development within biodiversity concept. My PhD thesis views 12 sustainabilty indices, whereas my proposed composite appraising supportive progress (CASP) has the best fit to evaluate sustainability towards economic growth of any country. 

Petrosyan Azniv (2014), “Appraising Biodiversity in Supportive Progress Using GIS Means”, LAP LAMBERT, Academic Publishing Company in Saarbrucken, Germany, ISBN: 978-3-659-34415-2, 668 pp.      https://www.lap-publishing.com/catalog/details/store/gb/book/978-3-659-34415-2/appraising-biodiversity-in-supportive-progress-using-gis-means?search=azniv%20petrosyan

Some deeper views are provided at https://www.researchgate.net/profile/Azniv_Petrosyan how biodiversity concept coinsides with the sustaianable development concept of 3 magnitudes, i.e. society, economy and environment with 6 categories in each dimension. If we measure economic growth, then we have to measure all parameters have improvements, whereas only GDP doesn't show that picture at all. 

Another point, which is important for the economic growth not only for the country but also for the whole world, is to create a position or work place for each individual or person and then to allow anyone to go for the PhD or Master Degrees. When I was applying to the PhD degree as per IKY Greek Governmental Scholarship at Panteion University in Greece in 2005, I was sure of having and apt work place in Greece. When I was graduating or after defendance of my PhD thesis at NTUA in 2012, I came up with corruption in Greece and finally I came back to my country Armenia whereas up to now the search of apt working post continues. I understood that corruption in Armenia, especially at American University of Armenia is much higher. Even though I have noticed that women discrimination in Armenia is much higher than it must be because Armenia was a Soviet country. My main fight is to lead my PhD thesis because I have given a promise to use my PhD degree in practice. 

Economic Growth is important for the whole system. To evaluate the economic growth there are many parameters to be used with concept of true use of true scientists. Petrosyan (2014) is the first step, however, i do search a place with apt payments to evaluate the true sustaianable development as per concept of biodiversity and to create the final CASP model to assess economic growth. 

Hope I was close to the point. 

Warmest regards

Dr. Azniv Felix Petrosyan, [email protected]

PhD of Rural and Surveying Engineering at NTUA