How to assess economic progress in the era of discontinuity?

How to assess the economic progress in the era of discontinuity?

The aim of this article is to contribute to the discussion on designing alternative economic development indices by measuring economic progress in the face of the discontinuity of globalisation. To this end, we use different evaluation criteria for the ‘old’ (1960–1990) and the ‘new’ (1990–2019) globalisation. First, the historical context that has shaped the contemporary globalisation processes is outlined, which makes it possible to identify the 1990s and the subsequent change in the structure of the world industrial production and the world GDP as the most important tipping point. Based on the observation that none of the existing indices sufficiently cover all the issues, a new pilot measure of economic progress is proposed, which takes into account two time periods: the old (1960–1990) and the new (1990–2019) globalisation. The analysis of the data sample of 18 countries (G6, I6 and selected LDCs) using this measure makes it possible to assign their economies to four categories, depending on the results they have achieved; the ‘winners’, the ‘losers’, the ‘late-bloomers’ and the ‘inmates of industry’. Furthermore, possible directions for the future research on the subject are indicated. The data set supporting this study has been made publicly available to help in its continuation.

Policy implications

  • Economic  progress  is  a  narrower  concept  than   development,   but   it   encompasses   more  than  just  economic  growth  dynamics.  Designing any progress index, one needs to consider a set of complementary indicators.
  • Globalisation  is  not  a  continuous  process.  Measuring  the  progress  shaped  by  different  waves of globalisation calls for a dynamic approach and appropriate change of indicators used. The 1990s brought the first significant shift, as reflected in the proposed new index structure.  A  second  shift  is  currently  taking  place  due  to  the  COVID-19  pandemic  and  the corresponding responses of the national economies.  In  the  future,  it  will  be  possible  to  adjust  the  indicators  making  up  the  progress index to the post-pandemic era, allowing  for  tailor-made  macroeconomic  policy  recommendations.
  • Alongside  winners  and  losers  of  globalisation,  one  can  also  distinguish  late-bloomers  and  inmates-of-industry  that  call  for  special  attention and a specific bundle of policy tools.
  • The  progress  index  could  prove  helpful  for  experts at international organisations such as the  World  Bank  or  IMF  in  formulating  policy  recommendations  for  groups  of  economies  that  are  similar  in  terms  of  indicators  contained in the index, rather than using income level  classification.  A  "late-bloomer"  might  require different treatment than a "loser", de-spite  both  of  them  belonging  to  the  "low  in-come" group.


Photo by Ksenia Chernaya