2.3. Why GDP is the Most Acceptable Indicator Worldwide?

♤ GDP growth (as a measure of economic growth) is a major contributor to welfare and GDP tends to be correlated with several other measures of ‘development’, such as literacy and healthcare provision.

♤ As currently defined, it has a clear methodology and is relatively easy to calculate.

♤ Since it is a monetary/mathematical/accounting calculation with an established methodology, it is objective (in contrast, such things as ‘happiness’ and ‘political freedom’ are subjective and difficult to measure).

♤ It is widely used and all GDP calculations are made using broadly the same methodology. This facilitates cross-country and over-time comparisons.

♤ Given its long history and standard methodology, it is reasonably well-understood by policy- makers.