Going beyond GDP to measure what really matters
The publication of the latest EU Transitions Performance Index (TPI) provides an important opportunity to assess how countries are progressing towards fair and prosperous sustainability beyond headline growth figures.
For over 70 years, one figure has trumped all others when it comes to measuring a country’s success: Gross Domestic Product (GDP). It is used as the key indicator to measure the size and strength of economies, and rising GDP has traditionally been equated with rising prosperity; a goal prized by politicians, policymakers, and economists the world over.
But what have been the actual costs of this quest for perpetual growth, and might there be a better way of assessing a country’s progress?
Take climate change, a crisis fuelled by rising emissions and over-consumption, which both contribute to rising GDP. A reliance on one headline indicator, which is unable to distinguish between “beneficial” and “harmful” economic activities, or inequalities in society, means we may be missing much of what matters for measuring and promoting wellbeing and sustainability.
A more holistic view of progress
Measuring what matters is behind the development of a new composite indicator, the Transitions Performance Index (TPI), by the European Commission. TPI is both a scoreboard and a composite indicator that monitors and ranks countries based on their transitions towards fair and prosperous sustainability. Its aim is to offer a more holistic view of a country’s progress.
Speaking at its launch event in 2020, Commission Research and Innovation Director-General, Jean Eric Paquet, explained the importance of developing new indicators to drive forward the ambitious policies that are required post-pandemic. His comments echoed those of Commission President, Ursula von der Leyen, whose State of the Union Address described how Covid-19 had ‘laid bare…the limits of a model that values wealth above wellbeing.’
Assessing the performances of 72 countries, including all 27 EU Member States, TPI uses pre-existing, international data from the past decade. Its second edition, which was published on 14 March, points to strong performances from all Member States, most notably Denmark and Ireland; second and third in the global ranking behind only Switzerland.
In the report, Mariya Gabriel, Commissioner for Innovation, Research, Culture, Education & Youth, noted: ‘Our Transitions Performance Index (TPI) provides a tool for developing well-balanced policies in a complex and multi-faceted reality by keeping track of the recovery and the transition towards a more sustainable, competitive and inclusive growth model for the post-pandemic era.’
Dr Daniela Benavente, a Chile-based economist and specialist in the construction of composite indicators, helped to develop and refine TPI for the Commission. For her, shifting the development focus through TPI can be a gamechanger. ‘We have to change the paradigm of development as not being just growth, not being just economic development, but being all these other environmental, social and governance issues, otherwise it’s just not sustainable,’ she explained.
A superleague for sustainability
For Benavente, TPI offers the potential to better embed sustainability in policymaking, encouraging and enabling countries to share best practice towards more sustainable futures. She said: ‘The fact that we’re using an index is important, the focus is on metrics and evidence, but there is a normative effect in signalling what it is that matters.’
Within the TPI, countries are ranked and allocated into five performance groups denoting their status from “leader”, “strong”, “good”, “moderate” and “weak”.
Underneath TPI’s four main performance pillars – “economic”, “environmental”, “social” and “governance” – sit 16 sub-pillars which range from education to health, through to participation in decision-making. The latest edition has also evolved to better mirror transitions in the economy and the environment. It has two new key features, including a focus on digital data to capture the role of digitalisation in the economy, and a new indicator to track countries’ material footprint to better reflect the environmental impact of consumption.
According to Benavente, another way of looking at these indicators is that some emphasise opportunity (education, work, and inclusion), others resilience (health, fundamental rights), others prosperity (wealth, non-renumerated time), and others intergenerational fairness (emissions reduction, sound public finances, material footprint, biodiversity).
She credited its focus on governance as a crucial component for setting TPI apart from other indicators. ‘Everything has to do with governance, how you make decisions, how you involve the public in policymaking. Whilst this is not always easy to capture, without good governance you can never achieve resilient, inclusive and sustainable growth.’
Worryingly, the latest data suggests that despite overall improvements in countries’ TPI performance, governance transition scores are declining globally.
Building sustainable policies
Elizabeth Dirth, Senior Policy Consultant at the Zoe Institute for future-fit economies, has been involved in multiple projects focused on redefining and measuring prosperity, including through the organisation’s own ‘Compass Towards 2030’ dashboard. She said indicators like TPI are essential, but the key question is how they are embedded in policy processes.
‘Fundamentally, indicators don’t give us a direction of travel. We need to set goals and targets and, while it’s really important to have visibility of these issues and their inter-connections, we have to also talk about where we are going, what are our goals, aspirations; what’s our North Star?’
Ensuring TPI can be successfully applied to policy has been built into its development by Dr Benavente and colleagues. In contrast to most indices, which cover one year at a time, progress is judged over the 2011-2020 decade against pre-defined policy “goalposts”.
What is interesting, said Dr Benavente, is that the EU and Member States are already performing particularly strongly in the TPI. ‘It’s not that the EU is picking the right indicators, it’s that they have understood what good growth looks like and from their policies and targets, their collective efforts are working well,’ she explained.
For the EU, the TPI is expected to play an important role in measuring progress towards objectives under the 8th European Action Programme (EAP) to 2030 and the European Green Deal. The European Parliament recently requested the Commission to provide a “beyond GDP” dashboard, as part of the EU’s efforts to implement the UN Agenda 2030.
Grace O’Sullivan MEP is the rapporteur for the European Parliament on the 8th EAP. An ecologist by training, she understands the links between environmental, economic and social policies. For instance, the EU’s framework programme for environment policy recognises the need for economic transformation. The important part is how progress is measured.
‘There exists a plethora of indicator sets that measure progress by looking at more than just GDP, and these could and should serve as useful governance tools for policymakers. The 8th Environment Action Programme recognises the potential of these indicator sets, like the TPI, to act as a helpful tool in measuring progress towards a more sustainable and just EU’, she explained.
Bending the curve
Whilst TPI offers a way ahead for more sustainable prosperity, Elizabeth Dirth stressed that a 70-year history of GDP cannot be undone overnight. ‘The challenge is that GDP is not only deeply embedded in our policy processes and frameworks, but also embedded in the technical aspects of how we understand our economic health. Sometimes there’s an under-estimation around the decoupling in our mindsets.’
One of the areas where these trade-offs will be most acutely faced is the environment. Despite certain examples of progress, the latest TPI suggests that most countries have so far not “bended their curves” towards the green transition, remaining on a path of increasing emissions, material use, loss of biodiversity and energy inefficiency.
These issues will increasingly come to the fore for developing and emerging economies – from Morocco to Indonesia – those which currently perform well on the TPI sustainability indicators but now look to further industrialise. This economic development could hamper their environmental scores.
Dr Benavente points to the TPI’s two-page country profiles which include detailed metrics that highlight a country’s performance against a range of indicators and use progress arrows to provide a warning when things are off track. ‘The red arrows are the alarms,’ she said, ‘be mindful and bend those curves!’
She hopes that in time TPI can act as a brake in tilting curves, enabling emerging economies to develop but in more sustainable ways. ‘Clearly, economic growth remains important, and countries want to grow. But the message has to be: grow within confines, be careful and build on your strengths to address your weakness, not one at the expense of the other,’ she added.
In the context of emerging EU policies, post-Covid recovery plans and UN Sustainable Development Goals (SDGs), it is now hoped the TPI can act as an important counterbalance to GDP. Backed up by ambitious policies, it provides a valuable way of assessing how countries are progressing towards greener, more resilient, and more inclusive societies.
The research in this article was funded by the EU. This article was originally published in Horizon, the EU Research and Innovation Magazine.
De-dollarization is gaining momentum
Brazil and China have reportedly struck a deal to ditch the U.S. dollar in favor of their own currencies in trade transactions.
The announced deal will enable China and Brazil to carry out trade and financial transactions directly, exchanging yuan for reais – or vice versa – rather than first converting their currencies to the U.S. dollar.
The Brazilian Trade and Investment Promotion Agency (ApexBrasil) said the new arrangement is expected to “reduce costs” and “promote even greater bilateral trade and facilitate investment.”
China is Brazil’s largest trading partner, accounting for more than a fifth of all imports, followed by the United States, according to the latest figures. China is also Brazil’s largest export market, accounting for more than a third of all exports.
China overtook the United States as Brazil’s top trading partner in 2009. Today, Brazil is the largest recipient of Chinese investment in Latin America, driven by spending on high-tension electricity transmission lines and oil extraction.
Brazilian President Luiz da Silva, sworn in on January, has moved to strengthen ties with Beijing after a period of rocky relations under his predecessor, Jair Bolsonaro, who used anti-China rhetoric on the campaign trail and in office.
An official meeting of all ASEAN Finance Ministers and Central Bank Governors kicked off in Indonesia. Top of the agenda are discussions to reduce dependence on the US Dollar, Euro, Yen, and British Pound from financial transactions and move to settlements in local currencies.
The meeting discussed efforts to reduce dependence on major currencies through the Local Currency Transaction (LCT) scheme. This is an extension of the previous Local Currency Settlement (LCS) scheme that has already begun to be implemented between ASEAN members.
This means that an ASEAN cross-border digital payment system would be expanded further and allow ASEAN states to use local currencies for trade. An agreement on such cooperation was reached between Indonesia, Malaysia, Singapore, the Philippines, and Thailand in November 2022. This follows from Indonesia’s banking regulator, stating on March 27 that the Bank of Indonesia is preparing to introduce its own domestic payment system.
Indonesian President Joko Widodo has urged regional administrations to start using credit cards issued by local banks and gradually stop using foreign payment systems. He argued that Indonesia needed to shield itself from geopolitical disruptions, citing the sanctions targeting Russia’s financial sector from the US, EU, and their allies over the conflict in Ukraine.
Moving away from Western payment systems is necessary to protect transactions from “possible geopolitical repercussions,” Widodo said.
Of the ASEAN nations, just Singapore has enforced sanctions on Russia, while all other ASEAN nations continue to trade with the country. There has been alarm at being caught up in US-led secondary sanctions, as are short to impact Central and South Asia countries involved in cotton manufacturing, a major industry in the region employing millions of people.
U.S. bank trouble heralds The End of dollar Reserve system
The US banking system is broken, stresses ‘The Asia Times’. That doesn’t portend more high-profile failures like Credit Suisse. The central banks will keep moribund institutions on life support.
But the era of dollar-based reserves and floating exchange rates that began on August 15, 1971, when the US severed the link between the dollar and gold, is coming to an end. The pain will be transferred from the banks to the real economy, which will starve for credit.
And the geopolitical consequences will be enormous. The seize-up of dollar credit will accelerate the shift to a multipolar reserve system, with advantage to China’s yuan as a competitor to the dollar.
Gold, the “barbarous relic” abhorred by John Maynard Keynes, will play a bigger role because the dollar banking system is dysfunctional, and no other currency — surely not the tightly-controlled yuan — can replace it. Now at an all-time record price of US$2,000 an ounce, gold is likely to rise further.
The greatest danger to dollar hegemony and the strategic power that it imparts to Washington is not China’s ambition to expand the international role of the yuan.
This crisis is utterly unlike 2008, when banks levered up trillions of dollars of dodgy assets based on “liar’s loans” to homeowners. Fifteen years ago, the credit quality of the banking system was rotten and leverage was out of control. Bank credit quality today is the best in a generation. The crisis stems from the now-impossible task of financing America’s ever-expanding foreign debt.
America’s chronic current account deficits of the past 30 years amount to an exchange of goods for paper: America buys more goods than it sells, and sells assets (stocks, bonds, real estate, and so on) to foreigners to make up the difference.
America now owes a net $18 trillion to foreigners, roughly equal to the cumulative sum of these deficits over 30 years. The trouble is that the foreigners who own US assets receive cash flows in dollars, but need to spend money in their own currencies.
Before 1971, when central banks maintained exchange rates at a fixed level and the United States covered its relatively small current account deficit by transferring gold to foreign central banks at a fixed price of $35 an ounce, none of this was necessary.
The end of the gold link to the dollar and the new regime of floating exchange rates allowed the United States to run massive current account deficits by selling its assets to the world.
In effect, the market worries that buying inflation protection from the US government is like passengers on the Titanic buying shipwreck insurance from the captain. The gold market is too big and diverse to manipulate.
The dollar reserve system will go out not with a bang, but a whimper. The central banks will step in to prevent any dramatic failures. But bank balance sheets will shrink, credit to the real economy will diminish and international lending in particular will evaporate.
Southeast Asia will rely more on its own currencies and the yuan. The dollar frog will boil by slow increments.
It’s fortuitous that Western sanctions on Russia during the past year prompted China, Russia, India and the Persian Gulf states to find alternative financing arrangements. These are not a monetary phenomenon, but an expensive, inefficient and cumbersome way to work around the US dollar banking system.
As dollar credit diminishes, though, these alternative arrangements will turn into permanent features of the monetary landscape, and other currencies will continue to gain ground against the dollar, concludes ‘The Asia Times’.
Mastering Writing Skills: Write Effectively for Academic and Professional Success
Most people underestimate the importance of knowing how to write. In school, students are assigned paper after paper. The results help teachers grade their knowledge. But, that’s not the main reason why these are assigned. Essays and other papers give students practice, and a chance to learn effective writing. It’s a lifelong skill that not only serves to land them a passing grade but can also help them boost their professional success later on.
How to Master Your Writing Skills
If you want to make sure that you learn how to write better, both for academic and professional success, here are some tips and tricks for you.
1.Ask Someone to Write for You
The best way to learn how to write is to read what you need to write. If you aim for academic success but don’t know how to craft a paper that gets you an A, get some writing help from a reliable service. Today you can simply go online and request to write my essay and you’ll receive a top-notch assignment. This isn’t just to help you meet a deadline or land a high grade. You can also use it for college learning – to read what a good paper should look like.
When you have a finished piece of writing, this can be your guide. Students often order papers online to meet deadlines or make sure they get a high grade. Even if this is the case, use the opportunity to learn, too – next time you need to craft a similar paper, refer to the one written by an expert to boost your writing skills.
2.Read What You Like
Reading is an amazing way to boost your writing skills. How is this possible, you wonder?
For starters, reading books, articles, other papers, or anything else – can boost your vocabulary. When you read, you also come across different writing styles, giving you ideas for when you need to write.
Even though it might not seem this way when you actually read, reading gives you a lot of useful information that is stored in your subconscious.
If you want to master writing, truly master it, you need practice. Those essay assignments are not enough. You should do some free writing, too. Start your blog or journal, write letters to your peers, join a writing workshop, etc. Just write for the sake of it – practice is very important!
4.Don’t Skimp on the Editing Part
Editing is as important as writing itself – maybe even more important. While some mistakes might be acceptable in school, these are never welcome in professional circles. A single, unintentional mistake can have a devastating effect and ruin the quality or the message in your writing.
Research and writing are tiring, but this is no reason to skip the editing part and submit the work in a rush. If you want to learn to write better, you need to start by editing your work. When you proofread and edit it, you can find the most common mistakes you make and learn how to avoid them.
5.Focus on the Structure
The first draft is often a result of free writing. It’s good to write with the flow without focusing on the details, the mistakes, or the structure. This allows your thought to run without interruptions.
But, you can’t submit the first draft of any writing – not if you want it to be good.
In addition to editing the mistakes out of your writing, focus on the structure, too. Structure makes sure that your ideas get across to those who read the content.
Outlines are very useful for this. Many students see them as a waste of time since they aren’t formally required. However, a good outline can actually cut down the time you spend on editing and formatting your task. It will also make sure that the information in your essay flow and are clear to the reader.
6.Ask for Feedback – and Use It!
Unless you’ve mastered the skill of writing, you’ll make mistakes. This is how you learn, and there’s no shame in it. It’s also the time when feedback can really help you. Ask your mentors, your peers, your parents, and friends to take a look at your writing. Ask them to be blunt and tell you what flaws they find in your writing.
You might not accept all of their notes and feedback, but learning how others view and understand your writing is very useful.
Writing requires some talent but most importantly, it requires practice. It is something you learn in time, which is why it’s assigned at every academic level. So, practice, practice, and practice some more. This is how you’ll master the skill!
The possibilities of restoring the ancestral functions of asteroids and averting their dangers
Over billions of years the earth, other planets and further large astral presences have been hit by asteroids, which have...
Geopolitical Changes and the Significance of Russia’s New Foreign Policy Concept
Russian President Vladimir Putin has signed an order to endorse Russia’s updated foreign policy concept which was complied and presented...
Looking at Indonesia’s Nickel Downstream Efforts from The Perspective of Resource Curse
Republic of Indonesia under the government of President Joko Widodo is intensively pursuing downstream industries, mainly in the natural resource...
Ways to Overcome Afghanistan Crisis in Post-Republic Collapse
On August 15, 2021, the Afghan Republic government collapsed and the Taliban took over the Afghan capital city of Kabul....
Foreign Affairs: What sanctions on Russia can and cannot achieve
“U.S. policymakers began planning major sanctions on Russia in late 2021” (before the beginning of Ukrainian conflict!), recognizes ‘Foreign Affairs’....
Elsie Initiative Fund: call for proposals to continue investing in women’s meaningful participation in peacekeeping
At an event that brought together more than 350 representatives from Member States, UN organizations, academia and civil society, the Elsie...
What Beijing’s Iran-Saudi deal means
The agreement to reestablish diplomatic relations between Tehran and Riyadh was no “peace deal,” but the rivals did decide to...
Finance4 days ago
U.S. bank trouble heralds The End of dollar Reserve system
Americas3 days ago
Bulletproof Panama: An Isthmus of Stability Becomes a Magnet for Migration
International Law4 days ago
Putin, Xi, the ICC, and the Demise of Global Judiciary
Middle East4 days ago
The New Middle East: The Winners and Losers
South Asia4 days ago
Pakistan’s Priority Ranking of SDGs
Economy3 days ago
Impact of Multinational companies on Pakistan
Science & Technology3 days ago
Communication as a realm of human enigmatic growth
World News4 days ago
Russia will deploy nuclear weapons in Belarus – EU and NATO went ballistic