The main message of the volume is that the economy needs a sustainability transformation, and new metrics are needed to monitor this transformation. According to the Central Bank, GDP was the most important economic indicator in the twentieth century, but today we need a compass that highlights several areas in addition to the traditional dimensions of economic development:
- reflects the environment,
- Social
- As well as the status and changes of financial sustainability.
With the Global Discussion Paper, Magyar Nemzeti Bank joins the broad effort to develop new indicators.
New indicators have emerged
We pointed out in our previous articles that the shortcomings of individual indicators, especially GDP, were discovered long ago, numerous analyzes of their limitations were conducted, and in response, more complex indicators emerged that also measure prosperity, future potential and sustainability. emerged from countries. We also know of local examples, such as the Harmonic Growth Index, developed by the Institute of Macroeconomics, which Kasaba Kandraksh, Vice President of the Central Bank, spoke of in appreciation earlier.
The GNI goes beyond currently widely used indicators in several ways, because it measures either large companies, or environmental or social sustainability. On the other hand, HNI takes into account all important aspects of sustainability and is based on six pillars:
- economic,
- Financial,
- Environmental
- and social sustainability,
- Action and knowledge-based,
- It also introduces the concept of demographic sustainability.
In addition to the six pillars, the index contains 32 objective indicators, and subjective indicators, which often cause distortions, are not included in the comprehensive income index. Another example of locally developed indicators is the Oeco Index of the Oeconomus Economic Research Foundation, for its creation a total of 25 sub-indicators were used. It covers economic, social and political dimensions that have been published with sufficient frequency and are available in various international databases for a wide range of countries.
The new economy needs new metrics
– Quoting Barnaba Viraj, Vice President of MNB, the thoughts of Central Bank Governor Gyorgy Matulsi. The sustainability revolution requires not only a new conceptual approach, but also a new type of measurement, which is why it becomes necessary to go beyond GDP. According to the Central Bank, the spiritual revolution of sustainability cannot take place without a widely accepted supreme indicator that corresponds to it, follows the vision of the theory and measures the extent to which the goals that can be derived from it are achieved.
This is how Giorgi Matolksi will show the way
the Sustainable GDP – Global Discussion Paper The book was based on the theses of Central Bank Governor Gyorgy Matulsi, whose initial idea was that in order to achieve a sustainability transformation In addition to intellectual renewal A measurement renewal must also be performed. The purpose of the multinational bank's new global discussion paper is to facilitate the measurement of sustainable economic growth.
- The first part of the book presents the limitations of GDP in measuring sustainability and well-being, as well as research that seeks to overcome them.
- The second part of the book describes two alternative measurement methods for estimating sustainability-enhanced GDP.
“According to the numerical estimate of sustainable GDP, in 2010 the Hungarian economy achieved significant growth not only in terms of traditional GDP, but also in sustainable GDP as a result of the innovative reforms implemented at the beginning of the decade, which at the same time ensured a balanced Economic and Sustaining Growth,” highlighted the authors of the book, who believe that the 2020s are an era of major risks and transformations. Global pandemics, the energy crisis and geopolitical realignment have affected the European economy, including the Hungarian economy, at sensitive points. It has upset previous balances and worsened conditions for sustainable growth.
For sustainable development and catch-up, a complete transformation in competitiveness is necessary in both Europe and Hungary, which includes accelerating the green and digital transformation and all measures that permanently increase the economy's ability to create value.
The central bank believes. In addition to coordination by the National Bank of Hungary, experts from the Central Statistical Office, Budapest University of Technology and Economics, Neumann János University and Pazmány Péter Catholic University also contributed to the preparation of the discussion paper.
(Cover photo: György Matolksi, President of Magyar Nemzeti Bank (MNB) at the Central Bank building on April 16, 2020. Photo: Zsolt Szigetváry / MTI)
