"GDP thinking" versus SNA - the greatest invention of the 20th century
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Date
2024
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Ivane Javakhishvili Tbilisi State University Press
Abstract
For nearly eight decades, Gross Domestic Product (GDP) has remained at the center of economic
analysis, international comparisons, economic and social policies, and strategic decisions. During this time,
both his fetishization and criticism also became a common story. However, over time, in parallel with
the increase in the level of his fetish, the depth of knowledge about him began to decrease, and it became
completely superficial not only among researchers, but even among national accountants. It seems that it
has become too trivial for them to rethink/update knowledge about which economic category they are
dealing with, what is its nature, how to explain its development trajectory, etc., especially in today's rapidly
changing world.
GDP is a child of the System of National Accounts (SNA). The complexity of this system, on the one
hand, and the lack of enthusiasm to delve into its essence, on the other, lead to a deepening in the gap
between GDP and knowledge about it. Well-known researchers of national accounts (see, for example,
Prof. Frits Bos) write and talk quite openly about this, and it is impossible not to agree with it.
Nevertheless, the SNA is deservedly named among the great inventions of the 20th century, and this
fact cannot remain unnoticed by its users. This means that the fundamental principles on which not only
the calculation of GDP but also the entire business process of producing macroeconomic statistics are based
deserve a deep understanding. It is extremely important to note that the challenges that time has
brought, and which can often make GDP the subject of criticism, do not mean that the SNA has exhausted
its potential or that its uniqueness has become questionable.
The purpose of this paper is to shed light on the main methodological findings through which SNA
was formed into a unique accounting system and thus became one of the greatest inventions of the 20th
century. In this paper, we present view, not that the SNA calculates GDP, but how it calculates GDP, which
we believe is what actually earns the system a place among the greatest inventions. On the other hand,
the paper examines some aspects of the recent criticism of GDP and points to the dangers that can be appeared
by developing this issue unwisely; it tries to consider whether the arguments of GDP critics to replace
it with other statistical instruments are justified.
Description
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Keywords
Citation
IX International Scientific Conference: "Challenges of Globalization in Economics and Business", Proceedings , Tbilisi, 2024, pp. 39-49