Last week’s contribution focussed on the growth in the gross domestic product in this country. My conclusion was that there is indeed economic growth in this country, but the growth is uneven as it is not across the various components of the GDP.

I have received comments on whether the GDP is the appropriate measure of a country’s economic wealth if it is not trickling to all levels and to all segments of the economy and society at large. One needs to say at the outset that, today, we have no alternative to GDP if we wish to measure economic growth; but there are many who now consider GDP as an inadequate tool.

The snag seems to arise from the fact that the way we measure progress is not the same as we look at progress. The governments of the world have long held the view that only one statistic that can really measure progress and show whether things seem to be getting better or getting worse is the gross domestic product. This is because the GDP is an index of a country’s entire economic output – the total sum of, among many other things, manufacturers’ exports, farmers’ incomes, retail sales and construction spending.

It is a figure that encompasses the size of the whole economy and, the traditional thinking, is that the more it grows, the more progress there is in a country, and the better off its people are.

Since we are what we measure, this has skewed economic thinking towards this single objective and economic policies are all geared at achieving growth in GDP. However, when we try to describe progress, we use different benchmarks. So we find that GDP is a misleading tool to measure prosperity because growth, progress and prosperity have to do with people and not with numbers.

The gross domestic product tells us about the growth or otherwise of the totality of the economy. It tells us nothing about its sustainability; it tells us nothing about the impact on society; and it tells us nothing on the quality of our lives. However, if want to measure prosperity not through the GDP measure, we need to find alternatives and we need to agree on these alternatives. Which indicators are the most suitable substitutes or complements to GDP?

Should one look at educational attainment? Or should one look at the level of crime? And what about the spread of income among a country’s citizens? Then there are health indicators and environmental considerations such as the quality of air that we breathe and the quality of the sea. Let alone the level of stress of people or its converse, the level of happiness. Several international institutions measure these elements but, so far, they have not become to be considered as a measure of economic progress. They are simply seen as enablers that achieve a higher GDP. They are seen to support economic growth but are not a measure of economic growth, progress and prosperity.

Individual businesses have also been through such a complex issue as there have been arguments and counter arguments as to what makes a strong company – having a strong balance sheet or a strong P & L?

Moreover, there are elements that gave value to the company which are not necessarily reflected in a balance sheet or a profit and loss statement, such as the level of innovation in a company, or the level of customer satisfaction, or the level of skills of the employees.

This led to two former KPMG consultants, Kaplan and Norton, to develop the balanced scorecard – a tool that several companies use and which keeps in focus not only financial performance.

Countries may need to go through the same process. Economists need to agree on what represents balanced economic prosperity, and start to measure those elements. The UN did develop the Human Development Index to measure progress in the developing countries, but individual governments still focus exclusively on GDP as the one real measure of growth.

The gross domestic figure does give us the financial measure of the sum total of all economic activities in a country but it does not measure progress and prosperity.