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Redefining success: Shift from GDP to HDI

For the longest time, we have measured growth based on the value of the goods and services we’ve produced within a specific time — our gross domestic product (GDP).

While it is a metric of a country’s economic development, it does not encapsulate the nation’s overall wellbeing. It measures the country’s productive capacity, but not the quality of life of its most valuable asset: its people.

In calculating the GDP, we see a country’s wealth but not how that converts into better quality of life; if that wealth translates into a better sense of security, happiness, success and life satisfaction for its citizens.

As a developing nation, we equate our progress with GDP, which is understandable as we need to elevate our capability to produce wealth in order to continuously progress. But we must focus on how the rewards of economic abundance is distributed. Development is not sustainable when there’s a great income gap.

In 1990, the United Nations Development Program (UNDP) started evaluating nations beyond its GDP. Through the Human Development Index (HDI), it provides a summary measure of average achievement in key dimensions of human development: a long and healthy life, which is assessed by life expectancy at birth; being knowledgeable, which is measured by mean of years of schooling for adults aged 25 years and more, and expected years of schooling for children of school entering age; and having a decent standard of living, which is measured by gross national income (GNI) per capita.

In creating this index, the UNDP emphasizes the value of people and their capabilities — instead of economic growth alone — in assessing the development of a country.

In the most recent Human Development Report (HDR) 2021/2022, the Philippines ranked 116th out of 191 countries in the HDI for 2021, three steps down from its 2020 rank of 113th. The report said that life expectancy at birth in the Philippines is 69.3 years old; expected years of schooling, 13.1 years; mean years of schooling, nine years; and GNI per capita using 2017 purchasing power parity is at $8,920.

The country’s score of 0.699 out of one was below the East Asia and the Pacific’s average of 0.749 and the global average of 0.732. Moreover, we are still at the medium tier, left behind by our fellow ASEAN-5 members — Singapore and Thailand are at the very high category, while Indonesia and Vietnam are under the high human development tier.

We need a lot of catching up to do. Based on the 2022 Program for International Student Assessment (PISA), the Philippines is five to six years behind in learning competencies. This means, we have to invest more in education and put a lot of effort into improving our education system.

We also need to greatly improve our climate resilience as our vulnerability to natural disasters and climate shocks substantially affect our development targets. The millions, and sometimes even billions, of losses and damages our country experiences every time a typhoon hits pulls us back. We have to make our economy and our communities resilient to these hazards.

It’s high time that we emphasize the HDI and use it as our measure of success as a country, while GDP should only be a component of it. Let us not simply calculate what we produce, but really look into how our nation’s wealth makes an impact on our citizens’ lives. 

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