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Economy & Digital Transformation brings together high-level experts to drive new economic indicator

Spain has supported the ongoing work in different international forums to update analytical tools to adequately measure progress, potential growth and economic resilience, taking into account sustainability, from an economic and financial standpoint, as well as environmental and social.

The Ministry of Economy and Digital Transformation has brought together a high-level panel of experts to reflect on how to measure progress, well-being and sustainability and to discuss the need to develop new economic indicators. Foto: Pool Moncloa/Fernando Calvo

The debate, moderated by the President of the Elcano Royal Institute José Juan Ruiz, was attended by the Nobel Prize in Economics winner Joseph Stiglitz, the Commissioner for the Economy, Paolo Gentiloni, the Secretary General of the OECD, Mathias Cormann, the Vice-President and Chief Economist of the World Bank, Carmen Reinhart, and the First Vice-President of the Government of Spain and Minister for the Economy and Digital Transformation, Nadia Calviño. The President of the Government of Spain, Pedro Sánchez, closed the event.

Need to adapt metrics to the green and digital transitions

In her opening speech, the First Vice-President pointed out the need to develop indicators to capture structural changes, such as those resulting from digitalisation or the ecological transition, as well as the need to incorporate social considerations when measuring economic performance and sustainability.

"Our understanding of well-being and prosperity is evolving, and our analytical tools need to be updated to take into account different variables and to properly gauge the potential growth and resilience of an economy. Also to make the best economic policy decisions", she argued.

For the well-being of our citizens

Nobel Laureate in Economics Joseph Stiglitz, president of the Commission on the Measurement of Economic Development and Social Progress that brought the issue to the table in 2008, stressed that "we need metrics that reflect vulnerability and insecurity".

The US economist highlighted that "the pandemic has shown the lack of resilience of some economies, the limitations in the ability to respond to shocks, an area where we need to develop better metrics to assess how strong our economy is".

Looking towards the future and the increasing importance of incorporating new indicators, Stiglitz is confident that "if we develop better metrics we will do a better job of formulating policies that improve our society and the well-being of our citizens".

Towards GDP+

The European Commissioner for Economy, Paolo Gentiloni, has pointed in the same direction. "We want the recovery to usher in a new era of sustained and sustainable growth. Therefore, there is no better time to focus on metrics that influence policy making. We want to see how we can get a better picture not only of the quantity of growth, but also its quality.

This does not mean, Gentiloni added, getting rid of GDP but seeing "how we can turn it into a better metric of the real size of the economy; and how we can complement it with indicators that can shape the debate on how to allocate resources in a sustainable and equitable way. That is why we can perhaps refer to this policy challenge as 'GDP+'".

In this sense, the OECD, Eurostat and the World Bank are working on the development of complementary indicators that evaluate the development of economies not only from the point of view of economic growth but also from that of environmental and social sustainability.

OECD Secretary-General Mathias Cormann explained that the OECD has been looking at questions about the quality of growth for many years - for 60 years. "We complement macroeconomic figures such as GDP with indicators of social mobility, equal opportunities, sustainability and others".

Cormann said that "GDP is an important objective measure", but acknowledged that "measurement tools that look beyond GDP are important to bring issues that show the complexity and multidimensionality of what matters to people in societies into the public dimension". On the other hand, he recalled that indicators alone "are not enough to become the guides to the changes we need, unless they are used systematically in policy making".

This was stated by the vice-president and chief economist of the World Bank, Carmen Reinhart, who stressed that one of the central points of the work of this institution is to analyse the level of poverty in a multidimensional way.

"We can do better by measuring other aspects, beyond income and consumption, beyond monetary metrics", and she mentioned the need to incorporate, among others, levels of access to basic infrastructure, or to a basic food basket".

The seminar was closed by the President of the Government of Spain, Pedro Sánchez, who insisted that "GDP is a fundamental variable for measuring economic development, but it does not have the capacity to reflect essential aspects such as environmental sustainability and other factors that determine a country's well-being". Among them, the president pointed to inequality because "equitable distribution is still a pending issue".

The president welcomed the holding of seminars such as the one held today because "these debates are fundamental, necessary and essential if we want to correct many of the mistakes that were made in the past and look towards the future with many more guarantees".


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