Decent Work and Economic Growth

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| Editors: Walter Leal Filho, Anabela Marisa Azul, Luciana Brandli, Amanda Lange Salvia, Tony Wall

Preserving Culture in Meeting Sustainable Development

  • Madhavi VenkatesanEmail author
Living reference work entry
DOI: https://doi.org/10.1007/978-3-319-71058-7_130-1
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Definition

The principal issue with respect to sustainable development and its relationship with culture can arguably be found in the measurement related to the attainment of the goal, gross domestic product (GDP). By its very definition, GDP is a production, resource, and technology focused indicator that is biased toward a singular perception of economic purpose and progress. The imposition of the indicator as a standard measurement tool to track SDG 8 progress and attainment implicitly fosters a convergence to a singular cultural perception to the extent that economic systems influence culture. To preserve cultural diversity, this relationship needs to be recognized along with the inclusion of alternate economic systems aligned to existing cultures in lieu of a singular GDP-based framework.

Introduction

The Sustainable Development Goals (SDGs), specifically SDG 8, aim at sustaining GDP growth in least developed countries (LDCs) above seven percent per year. However, climate-related hazards impact GDP. For example, in Vanuatu, losses due to storms between 1998 and 2009 were estimated at 27.1% of GDP. The Intergovernmental Panel on Climate Change (IPCC) cites high confidence that coral reef degradation will negatively impact island communities and livelihoods, including tourism. In Ethiopia, hydrological variability is projected to decrease GDP growth by up to 38%. In Tanzania, estimated costs of treating climate-related cholera cases in 2030 are 0.32–1.4% of GDP. In addition to these direct impacts, dehydration and heat exhaustion undermine people’s ability to carry out physical work – threatening safe working environments, which will affect Target 8.8. By 2100, climate change is predicted to reduce labor productivity by 11–27% in the tropics, which could reduce economic output in affected sectors by 8–22%.

Agyeman (2016) stated, “A truly sustainable society is one where wider questions of social needs and welfare, and economic opportunity are integrally related to environmental limits imposed by supporting ecosystems.” From this perspective, “Integrating social needs and welfare offers us a more ‘just,’ rounded, equity-focused definition of sustainability and sustainable development than Brundtland, while not negating the very real environmental threats.” A “just” sustainability is therefore “[t]he need to ensure a better quality of life for all, now and into the future, in a just and equitable manner, whilst living within the limits of supporting ecosystems” (Agyeman and Evans 2003). Agyeman (2016) notes that “just sustainability” focuses equally on four essential conditions for just and sustainable communities of any scale. These conditions include improving the quality of life and well-being; meeting the needs of present and future generations (intra- and intergenerational equity); justice and equity in terms of recognition, process, procedure, and outcome; and living within ecosystem limits (Agyeman 2016; Ewers and Smith 2007). None of these elements can be measured by GDP, yet GDP remains within the SDGs as a metric of measurement used in the attainment of sustainable growth.

The Implicit Bias of GDP

Van den Bergh (2009) in a survey of economics notes that a “widespread view among economists is that we should not get rid of GDP until a good alternative aggregate indicator is available.” The use of the indicator as a default due to a lack of alternatives does surface whether continued use of a faulty indicator may promote outcomes not aligned to sustainability objectives. Van den Bergh (2009) offers two counterarguments, “First, the many efforts to develop an improved indicator of social welfare and progress show that it is unlikely that a perfect indicator will arise in the near future. All current alternatives suffer from various shortcomings, even though most of them represent a clear improvement over GDP. Second, regardless of the availability of perfect alternatives, it seems wise anyway to remove the GDP indicator as it is seriously misleading information. One should especially take into consideration that this information failure is structural and affects long term economic structure through its influence on investment and innovation decisions by private and public agents. Removal of such an information failure really deserves an unreservedly enthusiastic response from economists. It is possibly the largest information failure we are facing, given that GDP is a central indicator in all countries and supranational governance structures” (Van den Bergh 2009). Costanza et al. (2014) surveyed subjective measures of well-being noting that all have potential shortcomings, but this should not preclude the development of a successor to GDP, which is defined as a “new set of metrics that integrates current knowledge of how ecology, economics, psychology and sociology collectively contribute to establishing and measuring sustainable well-being” (Costanza et al. 2014).

In a survey of GDP and other indicators, Baral and Holmgren (2015) note, “Although GDP is the most popular means of measuring economic performance, it ignores social costs, environmental impacts and income inequality.” The authors suggest, “There is a clear need to identify a small set of efficient and generic parameters for determining sustainability outcomes in landscapes. This could potentially help in, inter alia, assessing performance of development projects or support finance initiatives designed to invest in sustainable land-use practices” (Baral and Holmgren 2015).

Despite the growing consensus with respect to the limitations of GDP, the United Nations SDGs reference GDP as a performance metric for goals: 1, 7, 8, 9, 10, 11, 12, 14, and 17 (United Nations n.d.-c). This highlights both how embedded GDP has become as an assessment tool and the need to evaluate the attainment of the SDGs relative to the rationale for their establishment within country-specific contexts that include cultural sensitivity.

The Measurement of GDP

GDP is the global indicator of economic growth. GDP was a development of the twentieth century and was constructed to provide the US government with an assessment tool to assist with wartime planning and production needs. Since its introduction in the 1930s, GDP has become the standard global metric for measuring economic progress. The widespread use of the metric resulted in GDP being declared “One of the Great Inventions of the 20th Century” by the US Department of Commerce (2000).

GDP was established to be an indicator of production capacity. The benefit of GDP is that it provides a quantitative snapshot of an economy at a point in time and over time can provide an indication of the increase in production capacity. The use of the indicator for social evaluation purposes, such as standard of living, was strongly advised against by many economists, including the creator of the metric, Simon Kuznets. In a 1934 report to Congress, Kuznets stated, “The welfare of a nation can scarcely be inferred from a measurement of national income” (Kuznets 1934). In spite of warnings and concerns, the calculation of GDP has been used to impute the welfare of a country by dividing the aggregate value of GDP by the population of a country to derive per capita GDP. This value in turn has been used to compare countries. Though in aggregate cross-country comparisons, GDP offers an ability to quantitatively compare production output, the indicator cannot provide insight with respect to the evenness of the distribution of production output. In this manner, GDP is limited; the relative disparity between social classes cannot be discerned. Based on pure assessment of the components of the indicator and how it is assembled, it can be strongly argued that GDP does not provide an appropriate assessment of well-being. Given disparities in income, power, and social hierarchies, GDP does not provide a measure of social progress or quality of life, attributes that it nonetheless has been assigned to proxy (Boarini and D’Ercole 2013; Jones and Klenow 2016; Stewart 2005; Table 1).
Table 1

Components of GDP

By definition, GDP measures the market value of all (gross) final goods and services (product) produced within a country (domestic) at a specific point in time. From this perspective, GDP provides an aggregate value but no detail with respect to the distribution of goods and services, quality, or standard of living of a country’s inhabitants. However, given the relationship between employment, disposable income, and consumption, there is an implied connection between employment growth and GDP. As a result, employment is a significant predictor for GDP growth and to the extent that increased GDP growth is a target metric for countries relative to their measurement of progress, and employment growth and quality are also routinely evaluated

GDP can be calculated by assessing total income generated in an economy or total expenditures made within an economy at a specific point in time. The components of the expenditure calculation of GDP include consumption (C), investment (I), government (G), and net exports

(X – M), the formula for which is exports minus imports

GDP = C + I + G + (X – M)

C: Consumption spending, C, is spending by households on goods and services, with the exception of new housing. Included in household expenditures are durable and nondurable goods as well as medical care and education

I: Investment spending consists of the purchase of goods and services that will be used in the production of future goods and services. The expenditures include production facilities, inventory, and new housing

G: Government spending includes spending on goods and services by local and state and the national government, but it does not include transfer payments. Transfer payments do not reflect a direct purchase of a good or service; rather they reflect a reallocation of tax dollars. The expenditures of transfer recipients are already included in consumption spending, justifying their omission from G in the calculation of GDP

(X – M): Net exports reflect the net amount of purchases by foreigners of domestically produced goods (X) relative to the amount of foreign goods purchased in the domestic market (M). Net exports provide the status of the balance of trade between countries and are influenced by and also as a result of relative demand between trading parties and influence foreign exchange rates. Foreign exchange rates reflect the demand of one currency relative to another

GDP, itself, is a static value derived from the aggregated value of the final sale of goods and services in an economy at a specific point in time. The change in the value over time reflects growth in production and consumption and is the measure of economic growth in a country. Theoretically, the higher the growth in GDP, the higher the level of overall employment and the closer the rate of unemployment to its natural rate, which is country-specific and typically defined in Western countries as being comprised of primarily frictional or voluntary unemployment. Given the assumption of static supply in the short-run, low unemployment with stable prices signals that an economy may be operating at its potential GDP, which is defined as being where all resources available for production are being fully utilized. However, indicators of employment strength and price stability require interpretation. Arguably, social dynamics and employment trends, such as labor force participation rates, may obscure the interpretation of GDP values. As a result, both the perception of GDP and the assignment of a GDP value as being potential GDP in any given period are more art than science. Additionally, to the extent that resource prices may not adequately reflect the true cost of a given resource due to the externalization of nonmarket costs associated in production, consumption, and waste, a focus on GDP growth (Lepenies and Gaines 2016) may be a causal force in social and environmental justice issues as well as inequity in income distribution. Since GDP can only capture market costs, unpaid work is not factored into the value, thereby excluding child rearing, eldercare, and household responsibilities, attributions that have intrinsic value to family and community social structure. Neetha (2010) noted that the exclusion of unpaid work, much of which is allocated to women, promotes a perception of subordination in the value of women relative to men, leading to an economic bias, sociocultural bias, and a measurability bias in favor of male value. Alternatively, GDP captures military spending, health-care costs, pollution abatement expenses, and environmental reclamation, among other expenses that could be stated as not having direct value to improvement in the quality or standard of living of individuals. For this reason, a GDP focus can promote the appearance of strong near-term growth as measured in production output but at the price of long-term sustainable growth. Thus, a perversion exits with a GDP measure, as provided in an analogy by Anielski (2002), “an economic hero is a terminal cancer patient going through an expensive divorce, whose car is totaled in a twenty-car pile-up… The economic villain, according to the GDP, is the healthy person in a solid marriage who cooks at home, walks to work and doesn’t smoke or gamble.”

The Case for Alternatives to GDP

In the SDG Index and Dashboards Report 2018 (Sachs et al. 2018), the discussion is significantly macro-based with the quantitative evaluation providing little transparency with respect to improvements in quality of life and well-being on the individual level in developing countries. However, the need for data is noted, “Inequalities in economic and social outcomes require better data. Newly added indicators for OECD countries focusing on inequalities in economic, health, and education outcomes lower the SDG Index scores for some countries. This suggests significant shortfalls in ensuring that no one is left behind, which are hidden by aggregate data. Such disaggregated data are unavailable for most non-OECD countries, so greater investments are needed to fill these data gaps” (Sachs et al. 2018).

There has been much discussion in academia, civil society, and at the global level in the United Nations, on the need for alternative indices to GDP. Given that a GDP measure may be counter to sustainability, it would appear that the implementation of the SDGs would provide both a catalyst and justification for implementing an alternative “satisfaction” or “happiness” measure (Bleys 2012; Szell 2011). This is especially significant if cultural variations are to be accounted for and the implicit cultural bias toward capitalist societies inherent in GDP is to be addressed. After all, GDP fosters one perception of economic progress (Coyle 2014). Arguably, the measure, given its dependence on resource use and its exclusion of externalities associated with its growth, is inconsistent with sustainability objectives. Additionally, given that GDP does not account for nonmarket labor and unpaid work as a productivity measure, it understates labor productivity in countries where nonmarket activities are the norm. This cultural bias in the indicator, in inter-country comparisons, establishes a hierarchy between countries that reward the countries with the cultural orientation to the metric and not surprisingly relegate countries with different economic perceptions to lower status. To the extent that culture is a focus of the SDGs specific to heritage preservation, there is an urgent need to implement at minimum an additional indicator to evaluate the satisfaction status of society; without this inclusion, indigenous and sustainable societies will continue to be marginalized by measurement. In a prevailing GDP-oriented system, their contributions to global society will be marginalized due to a biased measurement. This in turn influences the attainment of equality. If only market strength determines pricing, the potential for exploitation, degradation, and depletion remains embedded in trade to the detriment of sustainable outcomes and the promotion of the vicious cycle of poverty.

Conclusion

SDG 8 relies on quantitative measures of GDP and employment to track progress. However, to evaluate improvement in economic growth and decent work, it is clear from the discussion that these terms are not without definitional issue. The quantitative evaluation of economic growth and decent work excludes cultural variations and may, by implementation, implicitly be fostering a single perspective of economic growth and employment, which in turn, may reduce and or even eliminate cultural variation with respect to economic system diversity over time. The discussion of this latter attribution to SDG 8 and the SDGs in general is limited in the literature; greater attention to this potential for cultural convergence with respect to economic systems as well as other attributes would be advocated in assessing SDG progress going forward.

Further, data limitations impact both quantitative and qualitative assessment of the SDG progress, particularly for developing countries (Sachs et al. 2018). Additionally, resource limitations in developing countries may result in a focus on some SDGs and not others. As Edouard and Bernstein (2016) highlight in their discussion of measuring progress of SDGs specific to reproductive health, the SDGs are interdependent and indivisible, and resource limitations may skew the outcome of domestic SDG progress based on individual national objectives.

Finally, as noted by the United Nations (n.d.-d), “The Sustainable Development Goals (SDGs) are intended to be universal in the sense of embodying a universally shared common global vision of progress towards a safe, just and sustainable space for all human beings to thrive on the planet. They reflect the moral principles that no-one and no country should be left behind, and that everyone and every country should be regarded as having a common responsibility for playing their part in delivering the global vision.” The moral aspect of the SDGs justifies a need to evaluate the objectives outside a market-based perspective. Morality and ethics are values that guide economic preferences but are not characteristics that can be instilled through economic incentives (Gössling 2003). The reliance on morality for the value and implementation of the SDGs fosters a need to promote more than a neoclassical framework to ensure their traction. Values that promote a local, national, and global perception of community and a sense of a shared commons, which can be facilitated through education, appear from this perspective to be the foundation for successful SDG implementation. Salamat (2016) states, “Sustainable development actions by governments or the private sector should be undertaken as a result of an innate duty, and not simply out of self-interest. In other words, such actions should not be taken only because they will reduce costs, increase revenues, create jobs or increase GDPs. Rather, they should also be taken to achieve the SDGs because, as rational human beings, preserving Earth’s environment and protecting the welfare of society as a whole are morally the right and the good things to do.”

On the surface, the SDGs and SDG 8 in particular may appear to be direct, clear, and understandable goals. However, in disaggregating SDG 8 with respect to unpaid work and trade along with nation-specific dynamics of the labor force and economic growth, differences in cultural norms and need for moral cohesion related to the promotion of the intent of the goal surface the complexity of implementation. SDG 8 is not just limited to metrics in assessing attainment. Successful implementation will rely on cultural sensitivity related to economic policy to ensure that developing countries retain the ability to develop economic systems that align to both SDGs and cultural norms. Overall, the SDGs will require more than economic ratios; the goals represent a paradigm shift that incorporates a foundation in morality and an associated understanding of the responsibility for all to share in the stewardship of our common resources.

Cross-References

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© Springer Nature Switzerland AG 2020

Authors and Affiliations

  1. 1.Department of EconomicsNortheastern UniversityBostonUSA

Section editors and affiliations

  • Rimjhim M Aggarwal
    • 1
  1. 1.School of Sustainability Arizona State UniversityTempeUSA