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Estimating the Genuine Progress
Indicator (GPI) for Brazil from 19702010
Daniel Caixeta Andrade (UFU, Brazil)
Junior Ruiz Garcia (UFPR, Brazil)
Araraquara-SP, September 2015
1
OUTLINE
 Main objective and context
 Rationale for the GPI calculation
 Methods
 Results
 Policy implications
 Final remarks
Main objective:
 Estimate the Genuine Progress Indicator (GPI) for Brazil
from 1970 to 2010:
To what extent Brazil has experienced genuine progress
over 1970-2010?
 Brazil: intense GDP growth throughout the 20th
century: 7th largest economy in terms of GDP;
 Brazilian GDP growth: has not increased the living
standards of most Brazilians  Brazil has one of the
most unequal societies in the world.
 One of the most
fascintating ilusions of
modern industrial
civilization is the
confusion between
growth and development
 “Growth in GDP is a means to an end. Hopefully, it brings with
it a better life for the masses. Yet, unless GDP growth raises
general living standards, true ‘development’ does not take
place” (Back, 1994, p. 631).
 “The most unforgivable sin of development planners is to
become mesmerised by high growth rate in GDP and to forget
the real objective of development” (Haq, 1976, p. 24)
Development as
Freedom
(Amartya Sen)
Development is a
process of steadly
increasing people´s
choices in order to
allow them to exercise their freedoms.
This process must me achieved in a RESILIENT WORLD.
5
The current Macroeconomic
Regime
To prevent the endogenous
crisis of capitalism through
active economic policies that
stimulate economic growth
Lord Keynes (1883-1946)
6
The capitalism system and its instability
7
The birth of GDP as the
primary metric of
economic growth
We needed an universal
accepted indicator to
monitor the economic
performance of nations.
Simon Kuznets (19011985)
8
9
Size should not
be the most
glorified
attribute ....
10
Rationale for the GPI calculation:
 GPI: modern version of the ISEW (Daly and Cobb,
1989);
 GPI: alternative index to GDP;
 GPI: comprises a set of monetarily valued items
distributed into three domains (economic, social and
environmental);
 GDP: main limitation is the lack of accounting for the
costs (social and enviromental ) of a growing economy;
Rationale for the
GPI calculation:
 GDP:
has
been
errousneoly considered
a measure of progrees
 “time to leave GDP
behind” (Costanza et
al., 2014) and “beyond
GDP” initiatives;
Costanza et al., Nature
January 2014
 GPI:
embraces
the
challenge
of
better
understanding the side
effects of a growing
economy;
 GPI: supported by ecological economists  may be a
realiable indicator for the optimal macroeconomic
scale and the uneconomic growth
 The “threshold hypothesis” (Max-Neef, 1995; Lawn &
Clarke, 2010).
Uneconomic growth
is a real possibility
under the
ecological-economic
perspective
We need to identify
the sustainable
scale and the
macroeconomic
optimal scale
14
What should be
taken into account
when assessing
the progress of
nations?
The GPI in a global perspective
“While global Gross Domestic Product (GDP) has increased
more than three-fold since 1950, economic welfare,
as estimated by the Genuine Progress Indicator (GPI), has
actually decreased since 1978.” (Kubiszewski et al., 2013)
The GPI in a global perspective
Source: Kubiszewski et al., 2013
The GPI in a global perspective
Source: Kubiszewski et al., 2013
Items typically used to calculate the GPI
Item
Domain
Contribution to GPI
Consumption expenditure
Defensive and rehabilitative expenditures
Expenditures on consumer durables
Services from consumer durables
Income distribution index
Welfare generated by publicly-provided
infrastructure
Value of non-paid household labour
Value of volunteer labour
Cost of unemployment and underemployment
Economic
Economic
Economic
Economic
Economic
Economic
Positive
Negative
Positive
Positive
Positive/negative
Positive
Social
Social
Social
Positive
Positive
Negative
Cost of crime
Cost of family breakdown
Change in the foreign debt position
Cost of non-renewable resource depletion
Cost of lost agricultural land
Cost of timber depletion
Cost of air pollution
Cost of waste-water pollution
Cost of long-term environmental damage*
Genuine Progress Indicator (GPI)
Population
Per capita GPI
Social
Social
Social
Environmental
Environmental
Environmental
Environmental
Environmental
Environmental
Negative
Negative
Positive/negative
Negative
Negative
Negative
Negative
Negative
Negative
Sum of items
GPI ÷ population
Methods:

Brazilian GPI: followed the traditional approach with
minor deviations (data shortage)  17 items

Economic domain: CONtotal (private and public); DRE; DI;
WPPI  ADJ_CONweighted

Social domain: LABOURhousehold; LABOURvolunteer ;
COSTunemployment ; COSTcrime ; COSTfamily; DEBT

Environmental domain: COSTnon-renewable; COSTland ;
COSTtimber; COSTair ; COSTwater; COSTlong-term_damage

LNCS: equal to the sum of all items in the environmental
domain  weighted by the EHI.
Results:
Year
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
Real GDP
(billion reais
at 2010
prices)
Real GPI
(billion reais
at 2010
prices)
783.52
872.02
977.12
1,113.71
1,214.41
1,277.67
1,402.76
1,467.37
1,514.79
1,617.29
413.03
449.35
480.26
502.98
526.58
525.47
565.76
588.14
621.22
640.25
Per capita
real GDP
(reais at
2010 prices)
Per capita
GPI
(reais at
2010 prices)
8,156.51
8,859.44
9,692.41
10,788.74
11,489.92
11,806.25
12,659.32
12,933.49
13,040.48
13,599.34
4,299.68
4,565.28
4,763.91
4,872.51
4,982.17
4,855.60
5,105.73
5,183.87
5,347.93
5,383.68
Per capita
Per capita
real GDP
GPI
(Index value: (Index value:
1970 =
1970 =
100.0)
100.0)
100.00
100.00
108.62
106.18
118.83
110.80
132.27
113.32
140.87
115.87
144.75
112.93
155.21
118.75
158.57
120.56
159.88
124.38
166.73
125.21
Real GDP, real GPI, per capita GDP, and per capita GPI:
Brazil, 1970-1979
Results:
Year
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
Real GDP
(billion reais
at 2010
prices)
1,764.64
1,687.11
1,696.90
1,639.04
1,725.41
1,862.50
2,011.29
2,083.68
2,081.55
2,149.81
Real GPI
(billion reais
at 2010
prices)
698.49
684.57
705.92
627.95
604.68
618.94
799.64
663.02
567.04
548.15
Per capita
Per capita
Per capita
Per capita
real GDP
GPI
real GDP
GPI
(reais at 2010 (reais at 2010 (Index value: (Index value:
prices)
prices)
1970 = 100.0) 1970 = 100.0)
14,495.10
13,539.06
13,306.39
12,563.98
12,937.54
13,672.46
14,467.25
14,697.89
14,409.88
14,616.73
5,737.53
5,493.70
5,535.49
4,813.49
4,534.05
4,543.54
5,751.86
4,676.78
3,925.41
3,726.91
177.71
165.99
163.14
154.04
158.62
167.63
177.37
180.20
176.67
179.20
133.44
127.77
128.74
111.95
105.45
105.67
133.77
108.77
91.30
86.68
Real GDP, real GPI, per capita GDP, and per capita GPI:
Brazil, 1980-1989
Results:
Year
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
Real GDP
(billion reais
at 2010
prices)
2,057.37
2,088.48
2,078.72
2,175.70
2,291.76
2,392.98
2,444.43
2,526.93
2,527.83
2,534.29
Real GPI
(billion reais
at 2010
prices)
717.10
744.26
745.50
709.47
798.72
1,020.18
1,041.99
1,071.84
1,077.15
1,074.31
Per capita
Per capita
Per capita
Per capita
real GDP
GPI
real GDP
GPI
(reais at 2010 (reais at 2010 (Index value: (Index value:
prices)
prices)
1970 = 100.0) 1970 = 100.0)
13,748.01
13,726.11
13,446.00
13,856.98
14,374.45
14,781.46
14,869.49
15,138.08
14,915.87
14,733.69
4,791.93
4,891.47
4,822.18
4,518.59
5,009.78
6,301.64
6,338.40
6,421.06
6,355.92
6,245.73
168.55
168.28
164.85
169.89
176.23
181.22
182.30
185.60
182.87
180.64
111.45
113.76
112.15
105.09
116.52
146.56
147.42
149.34
147.82
145.26
Real GDP, real GPI, per capita GDP, and per capita GPI:
Brazil, 1990-1999
Results:
Year
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
Real GDP
(billion reais
at 2010
prices)
2,643.41
2,678.17
2,749.30
2,780.83
2,939.72
3,032.51
3,152.46
3,344.61
3,517.51
3,505.96
3,770.09
Real GPI
(billion reais
at 2010
prices)
1,056.09
1,131.94
1,150.11
1,176.99
1,237.97
1,292.84
1,370.61
1,439.51
1,516.35
1,662.93
1,676.06
Per capita
Per capita
Per capita
Per capita
real GDP
GPI
real GDP
GPI
(reais at 2010 (reais at 2010 (Index value: (Index value:
prices)
prices)
1970 = 100.0) 1970 = 100.0)
15,148.05
15,133.60
15,325.49
15,300.03
15,975.85
16,291.33
16,756.41
17,603.50
18,342.74
18,119.50
19,312.96
6,051.94
6,396.27
6,411.08
6,475.79
6,727.75
6,945.41
7,285.25
7,576.49
7,907.30
8,594.34
8,585.94
185.72
185.54
187.89
187.58
195.87
199.73
205.44
215.82
224.88
222.15
236.78
140.75
148.76
149.11
150.61
156.47
161.53
169.44
176.21
183.90
199.88
199.69
Real GDP, real GPI, per capita GDP, and per capita GPI:
Brazil, 2000-2010
Results:
Annual growth rates over 1970-2010: 3.6% (GPI) and 1.7%
(per capita GPI)
Results:
GPI-GDP ratio: 0.53 in 1970 and 0.44 in 2010
Results:

1970s: best decade in terms of per capita GDP growth
but not in terms of per capita GPI growth;

1980s: ‘lost decade’ in Brazil  negligible growth in
per capita GDP and 35% decline in per capita GPI;

1980s: uneconomic growth due to socio-political and
institutional factors;

1990s and 2000s: per capita GPI increased at a faster
rate than per capita GDP.
Policy implications (PI):

Per capita GPI in Brazil: overall growth despite the
increase in social and environmental costs;

Per capita GPI in Brazil: non-ideal pattern of growth 
marginal costs of GDP growth have accelerated over
the study period;

PI # 1: immediate offical adoption of GPI as to monitor
externalities provoked by growing the economy;

PI # 2: foster investment in critical infrastructure;
Policy implications (PI):

PI # 3: consolidate improvements in the distribution of
income and wealth;

PI # 4: curb the social costs: fight crime events and
protect family integrity;

PI # 5: absolute necessity of limiting the material and
energy use as to keep the rate of physical throughput
within the resilience threshold;

PI # 6: improve material and energy efficiency;

PI # 7: ecological tax reform.
Final remark:
What does the Brazil GPI study tell us?
Overall, genuine progress has been
achieved, but in a non-ideally way. The
marginal costs related to the growing
Brazilian economy are huge and may
outweigh the marginal benefits in the near
future.
Thank you for your
attention!
Contact info:
Daniel Andrade: [email protected]
Junior Garcia: [email protected]