Measuring Growth, Development and Progress

ABSTRACT

We live in a rapidly changing, uncertain environment. The political and economic strength of countries and regions is changing based on their capabilities to become more resilient, futureoriented and knowledge-based. In this environment, basic economic indicators like growth measured by Gross Domestic Product (GDP) or Gross Fixed Capital Formation (GFCF) do not measure future readiness, resilience to change, or development in general, as they are based on past decisions. This paper argues that in order to be able to successfully adapt to the changing environment, economic and social achievements have to be measured not by growth indicators, but by development ones, which highlight real progress and convergence. Among them, intangible asset and intangible investment indicators are especially crucial, as they measure the real health of the economy and society. The key competitive factor on which progress will be based is human capital with good health, knowledge and skills. The paper proves that countries with excellent growth results lag behind in terms of development achievements, measured by the mentioned intangibles. This discrepancy may lead to a dangerous development trap situation. The paper uses statistical data of different countries to prove its suggestions.