Govt must target Gross Domestic Wellbeing

IF the government can make some people better off without making anyone worse off, who could possibly object?
It is the role of the government to provide for its citizens and contribute to a better society.

An increasing number of economists and policymakers worldwide are considering substituting Gross Domestic Product (GDP) for Gross Domestic Wellbeing.

Indeed, advanced economies are now measuring gross domestic wellbeing or currently considering whether to do so.

This action is motivated by the practical limitations of GDP as a measure of economic wellbeing of the population or living standards.

Gross Domestic Product refers to the market value of final goods and services produced within a given period of time by residents of a country.

Economists and policymakers use GDP to measure the success of policies, national wealth and often make welfare comparisons across countries on its basis.

They (myself included) believe that sustained growth of GDP is desirable because it improves living standards. However, the limitations of GDP have long been recognised. Notably, as a measure of policy success, GDP is particularly poorly suited to countries with large public sectors.

There is limited evidence that continual economic growth will lead to improved living standards for households. Besides, the national GDP figures hide significant regional variations in output, employment and incomes.
In Lesotho, for example, the growth of real GDP has averaged over five-percent a year since 2010. But economic growth was driven by the mining, construction and garment-manufacturing sectors, respectively.

The mining and construction sectors are predominately capital-intensive, hence they do not create abundant employment opportunities, and as a result, unemployment and income inequality are higher.

The income inequality tends to become pervasive because the rich are able to secure better education and political access, making it easier for them to stay rich.

Poverty remains widespread and concentrated in many rural areas in Lesotho. Nearly half of children under five years of age are stunted — an indicator of chronic malnutrition.

Infant and maternal mortality rates are rising. The country has the world’s third highest burden of HIV and AIDS.
Recently, Prime Minister Thomas Thabane declared that the country will fail to achieve four Millennium Development Goals (MDGs) to eradicate extreme poverty and hunger (MDG 1), reduce child mortality (MDG 4), improve maternal health (MDG 5), and combating HIV and AIDS and tuberculosis (MDG 6).

The premier therefore called for a concerted strategy to overcome these health and social challenges, as well as promoting job creation.

The launch of a Jobs Summit process last week demonstrated commitment of the government to address unemployment and extreme income inequality.

Economic growth and job-creation will overcome rising poverty to a limited extent, whereas spending on health and education are critical to achieving economic growth and tackling inequality, including poverty reduction.

Wellbeing research reflects that societies are better served by a policy focus on factors that have been shown to be critical to life satisfaction, including physical and mental health.

Thus the Gross Domestic Wellbeing approach is people centred: it is motivated by a desire to consider human progress and development in ways that extend beyond GDP.
Mental health makes an integral part of an individual’s capacity to lead a happy and fulfilling life.

However, it remains a low priority in most countries especially in Africa. In 2011, the prevalence of stunting among children under five years was 36 percent, the highest rate of stunting in the world.

Stunting is common in southern Africa. The global ranking of stunting prevalence shows that Lesotho ranks 28th highest out of 136 countries, the reason being about 40 percent of children under the age of five are stunted.
Stunting results from nutritional deficiency from the beginning of pregnancy when the mother is improperly nourished or after birth as a result of poor diets.
Stunting may also occur because of poor sanitation and hygiene.

Consequences of stunting include impaired cognitive ability, weakened immune system, greater risk of chronic diseases (diabetes, heart disease etc) and lower-than-average life expectancies.
Nations also face indirect costs, such as health care expenses and special education services for children who are stunted.

There is growing evidence that children who are stunted experience comparatively lower test scores, more frequent grade repetition and higher dropout rates.
Lesotho has among the highest percentage of repeaters, failure rates and dropouts in the first two grades of primary education.

But lower levels of educational achievement are associated with lower lifetime productivity and income, which makes breaking the cycle of poverty more challenging.
The government must adopt a multi-sector approach to tackle humanitarian and social challenges facing the country.

It is very clear that tackling childhood stunting and several social challenges will lead to better policies for fostering sustainable economic development, eliminating poverty and economic inequalities.

Prioritising health and nutrition in the heavily under-resourced rural areas will be worthwhile despite existing government budget constraints.

This will make everyone better off without necessarily making anyone worse-off.

 

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