The IUP Journal of Knowledge Management
Measuring Growth, Development and Progress

Article Details
Pub. Date : Apr, 2022
Product Name : The IUP Journal of Knowledge Management
Product Type : Article
Product Code : IJKM040422
Author Name : Magdolna Csath
Availability : YES
Subject/Domain : Management
Download Format : PDF Format
No. of Pages : 15

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Abstract

We live in a rapidly changing, uncertain environment. The political and economic strength of countries and regions is changing based on their capabilities to become more resilient, future-oriented and knowledge-based. In this environment, basic economic indicators like growth measured by Gross Domestic Product (GDP) or Gross Fixed Capital Formation (GFCF) do not measure future readiness, resilience to change, or development in general, as they are based on past decisions. This paper argues that in order to be able to successfully adapt to the changing environment, economic and social achievements have to be measured not by growth indicators, but by development ones, which highlight real progress and convergence. Among them, intangible asset and intangible investment indicators are especially crucial, as they measure the real health of the economy and society. The key competitive factor on which progress will be based is human capital with good health, knowledge and skills. The paper proves that countries with excellent growth results lag behind in terms of development achievements, measured by the mentioned intangibles. This discrepancy may lead to a dangerous development trap situation. The paper uses statistical data of different countries to prove its suggestions.


Introduction

The consequences of the Covid-19 pandemic, economic and political turmoils, and climate change pose the question whether national economies can creatively and successfully adapt to the changes, or will be left behind. Economic growth indicators are no longer acceptable for measuring the success of transformation, and the achievement of creating sustainable and resilient economies and societies. Managing change needs human creativity, knowledge and skills. If countries continue measuring their results based on the typical growth and tangible investment indicators, they may fall into a development trap and their economies may become irrelevant, unable to adapt to the dramatically changing environment. A development trap is a situation where a country’s development indicators are deteriorating or stagnating, even if growth data show good achievement.


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