WEF Rates Countries on Growth, Equity, Sustainability

Economists and policy makers are relying too much on gross domestic product as a measure of national performance to the detriment of people’s living standards, according to the World Economic Forum.

Ahead of its annual meeting in Davos, the Swiss-based foundation has sought to counter the focus on short-term growth by developing an alternative metric called the Inclusive Development Index, which rates 103 countries on growth, equity and sustainability, news outlets reported.

The top is dominated by smaller European nations. Norway remains the world’s most inclusive advanced economy, while Lithuania again tops the list of emerging economies. Australia is the only non-European nation featuring in the top 10, in ninth place.

“Decades of prioritizing economic growth over social equity has led to historically high levels of wealth and income inequality,” the WEF said in a report released Monday. That’s “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 findings largely make for bleak reading. Over the past five years, despite a growing world economy, social inclusion has fallen or been unchanged in 20 of 29 advanced economies and inter-generational equity has worsened in 56 of 74 emerging economies, Bloomberg said, according to the report.

Over the same period, less than half of the advanced economies were successful in reducing poverty and only eight saw a decrease in income inequality.

WEF argues that using GDP as a primary economic metric is ineffective as it measures current production of goods and services rather than the extent to which the economy contributes to broader socio-economic progress as seen in median household income, employment opportunity, economic security and quality of life.

Germany ranked the highest among countries in the Group of Seven, coming in 12th. It was followed by Canada in 17th place, France 18th, the UK 21st, the US 23rd, Japan 24th and Italy 27th.

The index has classified the countries into five sub-categories in terms of the five-year trend of their overall Inclusive Development Growth score—receding, slowly receding, stable, slowly advancing and advancing.

Despite its low overall score, India is among the ten emerging economies with ‘advancing’ trend. Only two advanced economies have shown ‘advancing’ trend. Among advanced economies, Norway is followed by Ireland, Luxembourg, Switzerland and Denmark in the top five.

The top-five most inclusive emerging economies are Lithuania, Hungary, Azerbaijan, Latvia and Poland.