1. ‘
Estimating the Genuine Progress Indicator (GPI) for Brazil from
Daniel Caixeta Andrade (UFU, Brazil)
Junior Ruiz Garcia (UFPR, Brazil)
Araraquara-SP, September 2015

2. OUTLINE Main objective and context Rationale for the GPI calculation
Methods
Results
Policy implications
Final remarks

3. To what extent Brazil has experienced genuine progress over 1970-2010?
Main objective:
Estimate the Genuine Progress Indicator (GPI) for Brazil from 1970 to 2010:
To what extent Brazil has experienced genuine progress over ?
Brazil: intense GDP growth throughout the 20th century: 7th largest economy in terms of GDP;
Brazilian GDP growth: has not increased the living standards of most Brazilians  Brazil has one of the most unequal societies in the world.

4. One of the most fascintating ilusions of modern industrial civilization is the confusion between growth and development
“Growth in GDP is a means to an end. Hopefully, it brings with it a better life for the masses. Yet, unless GDP growth raises general living standards, true ‘development’ does not take place” (Back, 1994, p. 631).
“The most unforgivable sin of development planners is to become mesmerised by high growth rate in GDP and to forget the real objective of development” (Haq, 1976, p. 24)

5. Development as Freedom
(Amartya Sen)
Development is a process of steadly increasing people´s choices in order to
allow them to exercise their freedoms.
This process must me achieved in a RESILIENT WORLD.

6. The current Macroeconomic Regime
To prevent the endogenous crisis of capitalism through active economic policies that stimulate economic growth
Lord Keynes ( )

7. The capitalism system and its instability

8. The birth of GDP as the primary metric of economic growth
We needed an universal accepted indicator to monitor the economic performance of nations.
Simon Kuznets ( )

10. Size should not be the most glorified attribute ....

11. Rationale for the GPI calculation:
GPI: modern version of the ISEW (Daly and Cobb, 1989);
GPI: alternative index to GDP;
GPI: comprises a set of monetarily valued items distributed into three domains (economic, social and environmental);
GDP: main limitation is the lack of accounting for the costs (social and enviromental ) of a growing economy;

12. Costanza et al., Nature January 2014
Rationale for the GPI calculation:
GDP: has been errousneoly considered a measure of progrees  “time to leave GDP behind” (Costanza et al., 2014) and “beyond GDP” initiatives;
Costanza et al., Nature January 2014

13. GPI: embraces the challenge of better understanding the side effects of a growing economy;
GPI: supported by ecological economists  may be a realiable indicator for the optimal macroeconomic scale and the uneconomic growth
The “threshold hypothesis” (Max-Neef, 1995; Lawn & Clarke, 2010).

14. Uneconomic growth is a real possibility under the ecological-economic perspective
We need to identify the sustainable scale and the macroeconomic optimal scale

15. What should be taken into account when assessing the progress of nations?

16. The GPI in a global perspective
“While global Gross Domestic Product (GDP) has increased more than three-fold since 1950, economic welfare,
as estimated by the Genuine Progress Indicator (GPI), has actually decreased since 1978.” (Kubiszewski et al., 2013)

17. The GPI in a global perspective
Source: Kubiszewski et al., 2013

18. The GPI in a global perspective
Source: Kubiszewski et al., 2013

19. Items typically used to calculate the GPI
Domain
Contribution to GPI
Consumption expenditure
Economic
Positive
Defensive and rehabilitative expenditures
Negative
Expenditures on consumer durables
Services from consumer durables
Income distribution index
Positive/negative
Welfare generated by publicly-provided infrastructure
Value of non-paid household labour
Social
Value of volunteer labour
Cost of unemployment and underemployment
Cost of crime
Cost of family breakdown
Change in the foreign debt position
Cost of non-renewable resource depletion
Environmental
Cost of lost agricultural land
Cost of timber depletion
Cost of air pollution
Cost of waste-water pollution
Cost of long-term environmental damage*
Genuine Progress Indicator (GPI)
Sum of items
Population
Per capita GPI
GPI ÷ population

20. Methods:
Brazilian GPI: followed the traditional approach with minor deviations (data shortage)  17 items
Economic domain: CONtotal (private and public); DRE; DI; WPPI  ADJ_CONweighted
Social domain: LABOURhousehold; LABOURvolunteer ; COSTunemployment ; COSTcrime ; COSTfamily; DEBT
Environmental domain: COSTnon-renewable; COSTland ; COSTtimber; COSTair ; COSTwater; COSTlong-term_damage
LNCS: equal to the sum of all items in the environmental domain  weighted by the EHI.

21. Results:
Year
Real GDP (billion reais at 2010 prices)
Real GPI (billion reais at 2010 prices)
Per capita real GDP
(reais at 2010 prices)
Per capita GPI
(Index value: 1970 = 100.0)
1970
783.52
413.03
8,156.51
4,299.68
100.00
1971
872.02
449.35
8,859.44
4,565.28
108.62
106.18
1972
977.12
480.26
9,692.41
4,763.91
118.83
110.80
1973
1,113.71
502.98
10,788.74
4,872.51
132.27
113.32
1974
1,214.41
526.58
11,489.92
4,982.17
140.87
115.87
1975
1,277.67
525.47
11,806.25
4,855.60
144.75
112.93
1976
1,402.76
565.76
12,659.32
5,105.73
155.21
118.75
1977
1,467.37
588.14
12,933.49
5,183.87
158.57
120.56
1978
1,514.79
621.22
13,040.48
5,347.93
159.88
124.38
1979
1,617.29
640.25
13,599.34
5,383.68
166.73
125.21
Real GDP, real GPI, per capita GDP, and per capita GPI: Brazil,

22. Results:
Year
Real GDP (billion reais at 2010 prices)
Real GPI (billion reais at 2010 prices)
Per capita real GDP
(reais at 2010 prices)
Per capita GPI
(Index value: 1970 = 100.0)
1980
1,764.64
698.49
14,495.10
5,737.53
177.71
133.44
1981
1,687.11
684.57
13,539.06
5,493.70
165.99
127.77
1982
1,696.90
705.92
13,306.39
5,535.49
163.14
128.74
1983
1,639.04
627.95
12,563.98
4,813.49
154.04
111.95
1984
1,725.41
604.68
12,937.54
4,534.05
158.62
105.45
1985
1,862.50
618.94
13,672.46
4,543.54
167.63
105.67
1986
2,011.29
799.64
14,467.25
5,751.86
177.37
133.77
1987
2,083.68
663.02
14,697.89
4,676.78
180.20
108.77
1988
2,081.55
567.04
14,409.88
3,925.41
176.67
91.30
1989
2,149.81
548.15
14,616.73
3,726.91
179.20
86.68
Real GDP, real GPI, per capita GDP, and per capita GPI: Brazil,

23. Results:
Year
Real GDP (billion reais at 2010 prices)
Real GPI (billion reais at 2010 prices)
Per capita real GDP
(reais at 2010 prices)
Per capita GPI
(Index value: 1970 = 100.0)
1990
2,057.37
717.10
13,748.01
4,791.93
168.55
111.45
1991
2,088.48
744.26
13,726.11
4,891.47
168.28
113.76
1992
2,078.72
745.50
13,446.00
4,822.18
164.85
112.15
1993
2,175.70
709.47
13,856.98
4,518.59
169.89
105.09
1994
2,291.76
798.72
14,374.45
5,009.78
176.23
116.52
1995
2,392.98
1,020.18
14,781.46
6,301.64
181.22
146.56
1996
2,444.43
1,041.99
14,869.49
6,338.40
182.30
147.42
1997
2,526.93
1,071.84
15,138.08
6,421.06
185.60
149.34
1998
2,527.83
1,077.15
14,915.87
6,355.92
182.87
147.82
1999
2,534.29
1,074.31
14,733.69
6,245.73
180.64
145.26
Real GDP, real GPI, per capita GDP, and per capita GPI: Brazil,

24. Results:
Year
Real GDP (billion reais at 2010 prices)
Real GPI (billion reais at 2010 prices)
Per capita real GDP
(reais at 2010 prices)
Per capita GPI
(Index value: 1970 = 100.0)
2000
2,643.41
1,056.09
15,148.05
6,051.94
185.72
140.75
2001
2,678.17
1,131.94
15,133.60
6,396.27
185.54
148.76
2002
2,749.30
1,150.11
15,325.49
6,411.08
187.89
149.11
2003
2,780.83
1,176.99
15,300.03
6,475.79
187.58
150.61
2004
2,939.72
1,237.97
15,975.85
6,727.75
195.87
156.47
2005
3,032.51
1,292.84
16,291.33
6,945.41
199.73
161.53
2006
3,152.46
1,370.61
16,756.41
7,285.25
205.44
169.44
2007
3,344.61
1,439.51
17,603.50
7,576.49
215.82
176.21
2008
3,517.51
1,516.35
18,342.74
7,907.30
224.88
183.90
2009
3,505.96
1,662.93
18,119.50
8,594.34
222.15
199.88
2010
3,770.09
1,676.06
19,312.96
8,585.94
236.78
199.69
Real GDP, real GPI, per capita GDP, and per capita GPI: Brazil,

25. Results:
Annual growth rates over : 3.6% (GPI) and 1.7% (per capita GPI)

26. GPI-GDP ratio: 0.53 in 1970 and 0.44 in 2010
Results:
GPI-GDP ratio: 0.53 in 1970 and 0.44 in 2010

28. Results:
1970s: best decade in terms of per capita GDP growth but not in terms of per capita GPI growth;
1980s: ‘lost decade’ in Brazil  negligible growth in per capita GDP and 35% decline in per capita GPI;
1980s: uneconomic growth due to socio-political and institutional factors;
1990s and 2000s: per capita GPI increased at a faster rate than per capita GDP.

29. Policy implications (PI):
Per capita GPI in Brazil: overall growth despite the increase in social and environmental costs;
Per capita GPI in Brazil: non-ideal pattern of growth  marginal costs of GDP growth have accelerated over the study period;
PI # 1: immediate offical adoption of GPI as to monitor externalities provoked by growing the economy;
PI # 2: foster investment in critical infrastructure;

30. Policy implications (PI):
PI # 3: consolidate improvements in the distribution of income and wealth;
PI # 4: curb the social costs: fight crime events and protect family integrity;
PI # 5: absolute necessity of limiting the material and energy use as to keep the rate of physical throughput within the resilience threshold;
PI # 6: improve material and energy efficiency;
PI # 7: ecological tax reform.

31. What does the Brazil GPI study tell us?
Final remark:
What does the Brazil GPI study tell us?
Overall, genuine progress has been achieved, but in a non-ideally way. The marginal costs related to the growing Brazilian economy are huge and may outweigh the marginal benefits in the near future.

32. Thank you for your attention!
Contact info:
Daniel Andrade:
Junior Garcia: