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A GPI is an attempt to measure whether or not a country's growth, increased production of goods, and expanding services have actually resulted in the improvement of the welfare (or Well-being ) of the people in the country. The GDP vs the GPI is analogous to the difference between the Gross Profit of a company and the Net Profit; the Net Profit is what determines the long term health of the company. Accordingly, the GPI will be zero if the increases in dollar costs of crime and pollution equal the total dollar rise in production of goods and services, all other factors being constant. MOTIVATIONS FOR DEVELOPING A GENUINE PROGRESS INDICATOR Most economists assess the progress in welfare of the people in a country over time by comparing the gross domestic product over time, that is, by adding up the annual dollar value of all the goods and services produced within the country over successive years. Even its inventors argue that GDP is prone to Productivism or Consumerism , over-valuing production and consumption of goods, and not reflecting Improvement In Human Well-being at all. (GDP was not intended to be used as a measure of these things, and was not supposed to be a measure of Goodness of any governmental decision. Its use to justify such decisions is a fairly recent phenomenon.) GPI, by contrast, takes into account the Enhancement Of Nature's Ability To Provide Services and Generate Water, Air, Soil And Produce . These things are part of a more inclusive ideal of progress, and are more easily perceived and believed by most people, than are raw industrial production metrics. GPI also reflects Sustainability : whether a country's economic activity over a year has left the country with a better or worse future possibility of repeating at least the same level of economic activity in the long run. For example, agricultural activity that uses replenishing water resources, such as river runoff, will score a higher GPI than the same level of agricultural activity that drastically lowers the water table by pumping irrigation water from wells. Some economists, notably developed--the notion that ''when macroeconomic systems expand beyond a certain size, the additional benefits of growth are exceeded by the attendant costs.'' (Max-Neef 1995.) Philip Lawn has developed a theoretical framework for determining the "costs" of economic activity that balance against the "benefits" of growth in a Genuine Progress Indicator to determine whether economic development improves or harms the welfare of people. According to Lawn's model, the "costs" of economic activity include the potential harmful effects of the following costs:
THEORETICAL FOUNDATION OF GENUINE PROGRESS INDICATOR The need for a GPI to replace biased indicators such as GDP was highlighted by analyses of Uneconomic Growth in the 1980s notably that of Marilyn Waring who studied biases in the UN System Of National Accounts . By the early 1990s there was a consensus in Human Development Theory and Ecological Economics that growth in Money Supply was actually reflective of a loss of well-being: that lacks of essential natural and social services were being paid for in cash and that this was expanding the economy but degrading life. The matter remains controversial and is a main issue between advocates of Green Economics and Neo-classical Economics . Neoclassical economists understand the limitations of GDP for measuring human wellbeing but nevertheless regard GDP as an important, though imperfect measure of economic output and would be wary of too close an identification of GDP growth with aggregate human welfare. However GDP tends to be reported as synonymous with economic progress by journalists and politicians and the GPI seeks to correct this shorthand by providing a more encompassing measure. The issue was brought to a head by Herman Daly in 1995 who asserted strongly that all growth that was in excess of sustainable norms (e.g. of Ecological Yield ) had to be considered to be Uneconomic . This was later underscored by John McMurtry in his book ''The Cancer Stage of Capitalism'' which likened the kind of growth that was being measured by GDP in the 1990s as being more like a tumour than like the healthy growth of an organism. Analysis by , notably Haiti , Indonesia , and some coastal Mangrove regions of India and South America . Some of the worst land abuses for instance have been Shrimp Farm ing operations that destroyed mangroves, evicted families, left coastal lands salted and useless for agriculture, but generated a significant cash profit for those who were able to control the export market in shrimp: this has become a signal example to those who contest the idea that GDP growth is necessarily desirable. Hicks: Distinguish "income" from "capital depletion" Hicks (1946) pointed out that the practical purpose of calculating income is to indicate the maximum amount people can produce and consume without undermining their capacity to produce and consume the same amount in the future. From a national income perspective, it is necessary to answer the following question: ‘‘Can a nation’s entire GDP be consumed without undermining its ability to produce and consume the same GDP in the future?’’ Fisher: Distinguish "enjoyment of life" from "production of goods" Fisher (1906) contended that "economic welfare depends on the psychic enjoyment of life," not just the production of goods. APPLYING THE GENUINE PROGRESS INDICATOR TO LEGISLATIVE DECISIONS The best known attempt to apply a GPI to legislative decisions is probably the GPI Atlantic indicator pioneered by Ronald Colman for 's office, to perform the analysis and report to the House Of Commons . This has not satisfied the stricter advocates of GPI, however: Canada continues to state its overall budgetary targets in terms of reducing its Debt To GDP Ratio , which implies that GDP increase and debt reduction in some combination are its main priorities. And not all parties believe that anything less than total commitment of the A-G's office only to the "genuine" indicators can achieve the goals. Despite the efforts of local communities to achieve more sustainable development, Canada lacks a federal Genuine Progress Indicator (GPI), said Green Party Of Canada former leader Jim Harris . “Measuring well being through GPI is the first step to forming solid solutions to problems facing our communities,” said Harris. “Indicators such as Gross Domestic Product (GDP) show financial growth without taking into account harmful activities such as crime and pollution. A strategy that uses GPI to better reflect our concerns is essential to protecting our health and overall well being.” {Link without Title} In the EU the Metropole efforts and the London Health Observatory methods are equivalents focused mostly on urban lifestyle. The EU and Canadian efforts are among the most advanced in any of the G8 or OECD nations, but there are parallel efforts to measure Quality Of Life or Standard Of Living in Health (not strictly Wealth ) terms in all Developed Nation s. This has also been a recent focus of the Labour Movement . The term Gross National Happiness was coined by the king of Bhutan . SUPPORTING COUNTRIES
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