Transcript GDP Growth Rates - EESC European Economic and Social Committee

European Economic and Social Committee
Joint ECO Section – SDO Hearing on
Beyond GDP
Involvement of Civil Society in the Development of Complementary
Indicators
Brussels, 26th January 2012
“Lessons for ‘Beyond GDP’ from the Great Recession”
Brendan Walsh
Professor Emeritus
School of Economics, University College, Dublin
E-mail: [email protected]
1
Over the last five years the European economy
has suffered the severest setback since the
Great Depression.
What can we learn from the record of these
years for the ‘Beyond GDP’ agenda?
2
Since 2007 EU27 has experienced an
unprecedented fall in GDP and a very sharp
rise in unemployment
3
GDP Growth Rate EU27
5
(constant prices)
4
3
2
%
1
0
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
-1
-2
-3
-4
-5
4
11
Unemployment Rate
EU27
10
9
%
8
7
6
5
4
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
5
The impact of the recession has not been
uniform across countries.
In particular, the unemployment rate has risen
much more in some countries than in others.
6
GDP Growth Rates
(Constant Prices)
5
Germany
4
3
2
1
%
0
-1
2006
2007
2008
2009
2010
2011
2012
-2
-3
Italy
-4
-5
-6
7
Unemployment Rates
29
24
Spain
%
19
14
9
Germany
4
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
8
Impact on well-being
Not surprisingly, these developments have had
consequences for social indicators and
measures of subjective well-being (SWB).
The overall level of SWB in the EU27 had been
declining since 2004 and this decline
accelerated at the onset of the crisis, but it
seems to have levelled off since 2009.
9
Eurobarometer Measure of Life Satisfaction
EU27
2.2
LS
2.1
2.0
1.9
1.8
10
The impact of the crisis on populations’ wellbeing will lead to a re-emphasis on the
importance of GDP and its components as
measures of progress.
This will make it harder to consolidate the gains
that have been made in promoting the
importance of other indicators during the
recession
11
The already-large disparities in SWB between
EU countries have widened since 2007.
12
Eurobarometer Life Satisfaction Scores
2011
3.0
2.5
2.0
1.5
1.0
0.5
0.0
13
The Satisfied and the Dissatisfied
2.8
2.6
Denmark
2.4
2.2
2.0
1.8
1.6
Greece
1.4
1.2
1.0
2004
2005
2006
2007
2008
2009
2010
2011
14
The impact of the crisis on the worst-affected
countries has varied markedly
2.4
2.2
Ireland
2.0
1.8
1.6
Greece
1.4
1.2
1.0
2004
2005
2006
2007
2008
2009
2010
2011
15
Accounting for Variations in SWB
It is important to explore the factors that
increased these disparities during the crisis.
Using the Eurobarometer Life Satisfaction data
for the 27 countries of the enlarged EU over
the eight years 2004-2011 we find -
16
• Higher income is consistently associated with higher
LS
– Its influence declines at higher income levles
• High unemployment reduces LS
• High inflation reduces LS
• After allowing for these macroeconomic variables,
substantial national effects in SWB persist.
17
• But even when income, unemployment, and
inflation have been taken into account,
significant fixed country effects remain.
• It is likely that cultural and governance
factors contribute to these differences.
• There is a clear case for the involvement of
civil society in identifying these factors in
order to promote national well-being.
18
Residuals from pooled regression
0.8
0.6
0.4
0.2
-0.2
DK
SE
NL
FI
UK
IE
BE
CY
SI
MT
LU
ES
PL
DE
FR
CZ
AT
SK
EE
LV
LT
IT
EL
RO
HU
PT
BG
0.0
-0.4
-0.6
19
To conclude:
• Enormous progress has been made over the
recent past in collecting, collating, and
disseminating valid indices of social progress.
• The problem is not a deficiency of indictors but
rather their limited impact on policy making.
• It is vital that the current adjustment process
within the EU take more account of the effects
of macroeconomic policies on unemployment,
living standards, and SWB.
20