Gross Domestic Product, which measures the value of goods and services produced or provided in any given year, is the best-recognised measure of economic performance in the world. For many, a rise in economic growth - as measured by GDP is shorthand for a rise in living standards and an increase in well-being. However, GDP has severe limitations as a human development indicator, as even one of the founders of the GDP concept Nobel Prize winning economist Simon Kuznets realised. The welfare of a nation can scarcely be inferred from a measure of national income, he wrote in a 1934 report to the US congress. If the GDP is up, why is America down? Distinctions must be kept in mid between quantity and quality of growth, between costs and returns and between the short and the long run. Goals for more growth should specify more growth of what and for what? GDP measures all economic activity fighting crime, natural disasters and environmental depletion - whether or not it contributes to an individuals well being or a communitys progress. This can produce some perverse results.
This video was produced by the European Commission in 2007.