The obsession with economic growth is far-reaching. It touches political debates, government policies and stock markets. Companies look at the growth of gross domestic product when deciding strategies, while a positive or negative GDP growth rate in any given quarter for any country is big news.
While this measure of economic growth can be a useful indicator of an economy's health, it is also a figure that is rapidly becoming obsolete.
Traditional systems to measure GDP were developed long before the internet.
The concept of GDP emerged in the 1930s, when economist Simon Kuznets used it in a report to the US Congress. He went on to receive the Nobel Prize in 1971 for his work in developing empirical interpretations of economic growth.
GDP is a measure of production of goods. It was never designed to account for services, which account for much of the economy in such places as Hong Kong, Switzerland and Costa Rica.
It is also not good for accounting for multinational supply chains, technological inputs and software upgrades or consumption, which are key components of the modern economy.
GDP measure is relatively straightforward. GDP equals the sum of private consumption, gross investment, government investment and net trade, meaning exports minus imports.
The idea is to measure transactions and products only once. So GDP is not particularly good at measuring goods or services produced through individual work.
An example of this failure is simple. Consider a typical family in Vancouver, Canada, or Hong Kong. The older generation bought a house or apartment 30 years ago for the equivalent of $200,000. The same property today could be worth 10 times as much, making the next generation millionaires on paper. That wealth would not be included in the traditional measure of GDP.
At the same time, many digital and sharing services are also not included in the traditional measures of GDP.
If a consumer buys a car or mobile phone, those purchases are included in GDP. However, if the car is part of a sharing service that provides value to many people-for instance, making it easier to commute to work or run errands-the value is not counted.
GDP numbers fail to measure the damage to the environment that production causes; nor do they take into account the cost of fixing this damage. GDP numbers also fail to measure any public benefits, such as parks, drinking water, public transportation, police services and more.
Efforts are underway to develop new and more comprehensive measures for the economy.
In China, the National Bureau of Statistics is looking at new methodologies that would account for the sharing economy, a system in which assets or services are shared between private individuals, either free or for a fee, typically by means of the internet.
In addition, the United Nations Development Programme has put forward the Human Development Index, which also measures quality of life.
For the time being, the obsession with GDP growth is likely to continue. It should not. There are better considerations and measurements.
In other words, GDP is not a catchall measurement. It should not be abandoned, but it should be given far less consideration.
The author is managing director of Bahati Ltd, a Hong Kong-based editorial services consultancy. The views do not necessarily reflect those of China Daily.