Lately, economists have included Human Development Index (HDI) in addition to Gross Domestic Product (GDP) as an indicator of development. This is a significant factor for development of any society, because if we set aside socio-economic factors of HDI and consider only GDP, we will find some gaps in measuring the actual economic development.
Economic status and structure varies from country to country. As a result, development planning and measurement tools need to be adjusted as per respective countries' economic status and priority. That is why, a common, standardised measurement system for all the countries creates gap and confusion for evaluating the actual development. It is true, we can measure the changes to some extent but ignoring some basic factors could back-fire the entire development process in future.
A simple example will clarify the issue. In developed countries like Sweden, Norway, Finland and New Zealand unemployment is not a problem, rather they are faced with the dearth of working population. They could have achieved more economic growth if they had sufficient working people. On the other hand, in counties like India, China and Bangladesh, employment generation is the main challenge for economic development. Millions of people of these countries are unemployed. Hence, the greatest challenge for these countries is job creation.
By ignoring other factors, GDP growth shows the increase of output of a country which is now becoming is becoming capital intensive. In Bangladesh, too, industries tend to be more capital intensive than they were twenty-thirty years ago. So, we need to focus more on the ever increasing unemployment problem. Development will not be sustainable if we set aside the unemployment problem. So, setting the parameter of development through GDP growth rate alone is grossly misleading. Countries where unemployment is acute have to design their production process largely on labour-intensive industries. The problem is being faced by India severely. Indian economy achieved remarkable growth, but it failed to contain the growing unemployment problem.
Among other issues, the fallout of faster economic growth is degradation of ecology and environment. For the time being, economic growth appears to be our first choice. But at a later stage, we may find environmental damage outweighing the growth. For example, one of our main export items is leather. We earn significant amounts of foreign exchange from exporting leather and leather items. For producing leather, tanneries located at hazaribagh area polluted the river Buriganga, the life line of Dhaka city. We began to realise that damage caused by the dumping of wastes and chemicals into the Buriganga is irreparable. So, the tanneries were removed from Hazaribagh to Savar where the facility of treating wastes would be available. Now, we need to asses how much we have earned from exporting leather and how much we have lost due to pollution. It is easy to get the figure of earnings but difficult to determine the amount of loss in quantified terms.
Economic growth damages the eco system in addition to environmental damage. Polluting the Buriganga destroyed the marine life, bio diversity and created adverse effect on the ecology in addition to causing environmental damage. Like Buriganga, almost all the rivers of the country are under the threat of pollution. Dumping waste into rivers is the cheapest and easiest way for industrial units. But we hardly estimate the social cost of such a practice. Even it is not possible to assess the long term economic impact of loss due to achieving short term economic gain.
Our economy is greatly dependent on the garment sector. But we grossly ignore the fact that garment dyeing units are polluting the water bodies and ecology of the country. If we consider only the economic impact of the issue, financial losses in most cases would certainly outweigh the short term gains.
Like ecology and environment, another important issue is economic growth and the problem of rich-poor gap. Many developing countries of Asia and Latin America are experiencing faster economic growth but at the same time inequality is rising at an alarming rate. Due to environmental degradation large numbers of people are becoming landless and ultra-poor every year, especially, due to river erosion. These occurrences are directly related to ecological and environmental degradation. Growing inequality in the society poses a serious threat to sustainable economic development.
We should take development in a holistic manner. In addition to GDP growth, we need to have a more inclusive mechanism for measuring economic development. If we focus more on the GDP growth rate only keeping aside the vital factors of development, such as-- employment, environment, ecology and equality, then sustainable development will hardly be achievable.
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