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Growth of The Nation
_{Policy for Growth Program}

 

Dr. Chai Na Pol A.

The national wealth indicators point out successes that a nation wants to achieve.  The indicators determine the direction of growth and development route.  If the indicator set is right, the nation goes forward in the right direction.  If the indicator set is wrong, the nation goes on the wrong path.  So, national wealth indicators can lead a nation to either success or failure.  Therefore, we will investigate the national wealth indicators and re-evaluate them whether they are worth enough to be the national growth direction or not, or what other indicators can there be.

For long, nations around the world use GDP (Gross Domestic Product) as national wealth indicator.  119 countries calculate GDP by general regression of the following form (Levine and Renelt, 1992)

Y = ß_iI + ß_mM + ß_zZ + u

Y  =  gross domestic product in constant dollars
I   =  a set of variables always included in the regression: log of population and log of capital formation
M  = a variable of interest: % of secondary school enrollment and life expectancy at birth
Z  =  a set of additional variables: % of gross national income, gross saving, lending interest rate, % of export import and foreign direct investment

General academicians calculate GDP with the following equation (Wikipedia Encyclopedia).

GDP = C + I + G + NE

C  =  Private Consumption
I  =  Private Investment
G  =  Government Expenditure  
NE  =  Export – Import

Many countries nowadays use this formula to calculate GDP.

Are these indicators response to what a nation really needs?  Do they lead national growth in the right direction?  

Evaluate the Equation

Besides export - import, we have seen that all GDP equations consist of only plus value with no minus value; that makes the equation imbalanced as in reality.  In fact, we cannot gain one without losing one; for instance, the higher the consumption rate, the less the environment left, the less the environment left, the higher global warming, the higher global warming, the declining agricultural economy, the declining agricultural economy, the higher poverty rate of the nation.

Though industrialization compensate these losses with income; industries hire a much lower percentage of labor than agricultural sector does.  Moreover, poor health conditions and extreme weather are consequences of environmental loss.  All of these cost the country highly.

So, to count every gain, we should also evaluate every loss for that gain too, otherwise the equation will give a misled understanding.

Consequential Effect

Since nations adopt GDP equation to drive growth and put all efforts, resources, regulative rights; and determine wealth of the nation by GDP over other dimension, citizen then struggle to make their own wealth, organizations fight for their rich empire.  This scenario happens around the world creating unexpected results. Let’s see some result. (Economics, 2015)

 

_{(Graphs, 2015)}

These reports show some degree of correlation between driving wealth of the nation by GDP and growth of crime rate.  The higher the nominal GDP, the higher the crime rate reported.  Why does it become like that?  Because driving high GDP and committing crimes are the results of the same psychological drive - greed.  Do we want to build a crime-ridden society by driving wealth of the nation?  All policy makers should answer this question before formulating a national policy.

Imperfect Equation

The aforementioned reasons prove that GDP formula is not perfect to calculate wealth of the nation and should not be the main driving policy for a country.  However, productivity is an obvious indicator of growth, and growth is good.  Therefore, policy makers should develop more effective leading indicators for optimum growth of a nation.

New Scenario of Growth of the Nation

One step toward the right direction is better than a thousand wrong moves.  To avoid misleading indicators, I would like to propose a formula for growth of the nation instead of gross domestic product (GDP).  The national growth must consist of major values that a nation really needs.

GN =  ƒ(QOL – UHL) + (W – C) + (PP – UU) + (SS – IC) + (CE – EW)

GN =   Growth of a Nation
QOL  =  Quality of Life
UHL  =  Unhappy Living Rate
W  =  Wealth
C   =  Crime Rate
PP  =  Political Peace
UU  =  Unfair Law or Unjust System
SS  =  Sensible Society
IC  =  Immoral Culture
CE   =  Clean Environment
EW  =  Extreme Weather

Growth of a Nation (GN)

Instead of driving GDP growth influencing and distorting other dimensions of development, a nation should focus on the total perspective of growth of the nation.  This is a real demand for every country and is the direct responsibility of all leaders.

Quality of Life (QOL)

A life that creates better value and growth is a life of quality, so citizens’ quality of life is a basic element for growth of the nation.  Quality of life consists of physical wellbeing, mental wellbeing, social wellbeing, economic wellbeing, public wellbeing, political wellbeing and growth wellbeing.  Quality of life must be a national agenda for the nation wishing good growth (WHO, 2004).

Unhappy Living (UHL)

Unhappy living of citizen of a country means life factors of that country are poor.  This can dilute life expectancy in terms of health and productivity.  Therefore, the right improvement of quality of life must directly reduce unhappy living.

Wealth (W)

Wealth of a Nation = Total Asset + Value Productivity + (Monetary Inflow – Outflow)

Crime Rate (C)

Business crimes caused economic collapses time after time. Economic collapses cause great depression, unemployment, unfair treatment, high suicide rate, and domino aftermath across the globe. So, the appropriate growing of national wealth must reduce crime rate effectively.

Political Peace (PP)

While internal political conflicts cause civil wars, international political conflicts cause international wars, and unfair interference cause terrorism.  All of these make huge damage to mankind. Therefore, political peace is a leading indicator for growth of a nation as well as for the world.

Unfair Law or Unjust System (UU)

Major political conflicts derived from unfair law and unjust system.  So, to secure peace, legislation and system setting must be transparent and open for 360 degrees participation.  A good political system must reduce unfair law and unjust system directly.

Sensible Society (SS)

Living in a bad neighborhood is like living in hell.  Naturally, every member of a society is a neighbor to one another.  To develop a good nation, a sensible society must be standardized.  Good education system and good religious movements are key factors for building a sensible society.

Immoral Culture (IC)

Hollywood action culture causes mass killings here and there across the United States.  Hong Kong revenge-cinema culture causes impoliteness across the island.  Japanese zero-defect culture causes stress and high rate of suicide.  Thai envy-play culture associates with unstable governments year after year.  Values and beliefs create habits, social habits create phenomena across the society; so, in order to build a safe society, all media and institutions must install morality into people’s consciousness, not just make money by ruining the society.  The right approach to building a sensible society must show reduction on immoral culture.

Clean Environment (CE)

Clean environment is not only a national asset, but also the wellbeing of the citizens.  People living in clean environment have better health condition than those living in polluted environment.  Moreover, in a clean environment, intangible assets prices are high, value can be added much more.  Therefore, clean environment must be one of the indicators of growth of a nation.

Extreme Weather (EW)

Storm, flood, earthquake, tsunami, landslide, drought and other extreme weather derived from imbalanced nature. These phenomena not only make economic damage but also cause sufferings for mankind.  So, the right environmental management must reduce these extreme weather and subsequent losses.

Conclusion

In the age that polity conquered the world, the world became crazy like Autocracy, Democracy.  In the age that economy conquers the world, the world becomes stressful, 60% of people working in high GDP countries have got stress and stress related diseases (Global Organization for Stress, 2013).  This world is not a toy for anyone to play around.  The world is populated by 7 billion people.  Most nations have more than one million people; only one country contains 300,000 citizens.  Now, it’s time to guide, manage, and give a hand to develop the world to be our best home for all.

 

References
_{Economics, 2015, ‘Top Ten Economies’, http://www.economicshelp.org/blog/6673/economics/top-10-economies/
Global Organization for Stress, 2013. ‘Stress Facts’. http://www.gostress. com/stress-facts/
Graphs, 2015, ‘Top Ten Crime Rate Countries’, http://graphs.net/countries-highest-crime-report.html
Levine, Ross and David Renelt, 1992 ‘A Sensitivity Analysis of Gross-Country Growth Regression’  American Economic Review, 82 (4): 942-63
World Health Organization, 2004. ‘Quality of Life (WHOQOL)-BREF’. Geneva, The World Health Organization.
Wikipedia Encyclopedia. 2015, ‘GDP’, https://th.wikipedia.org}