In
1989 the Berlin Wall fell and the so-called “transition period”
for Central and Eastern Europe began. The goal pursued was a radical
change of society at economic, political and social level. In
relation to this, Bulgaria endorsed a variety of development
programs, which were manipulated by the two supranational
institutions – the World Bank and the International Monetary Fund.
The country was quickly encompassed by a wide network of
non-governmental organizations (NGOs) whose number amounts nowadays
to 38,000. The UN agencies, supranational authorities and NGOs
organized and coordinated Bulgaria’s transition through the same
methods, ideas and language, which were being used for the Third
World Countries by that time.
by
Daniela Penkova
PART
4 - What kind of improvement? GDP is losing calories
Too much and for too long, we seemed to have surrendered
personal excellence and community values in the mere accumulation of
material things. … Gross National Product counts air pollution and
cigarette advertising, and ambulances to clear our highways of
carnage. It counts special locks for our doors and the jails for the
people who break them. It counts the destruction of the redwood and
the loss of our natural wonder in chaotic sprawl. It counts napalm
and counts nuclear warheads and armored cars for the police to fight
the riots in our cities … and the television programs which glorify
violence in order to sell toys to our children … it measures
everything in short, except that which makes life worthwhile. -
Robert Kennedy
The adopted index measuring development is the Gross
Domestic Product (GDP) – the market value of the produced end
products and services in a country in the course of one year. But the
GDP has never been able to describe the real prosperity of a certain
society. Many researches show that economic growth is not lastingly
accompanied by an improvement of the people’s well-being.
GDP was adopted by the World Bank and the International
Monetary Fund in 1990 replacing the index Gross National Product
(GNP). The difference between the two indexes is important and
explains the reason for the substitution: GDP measures the production
within a territory and GNP considers the citizenship. When a
privatization is carried out, the production is being performed on a
country’s territory (and thus is being reported as GDP) but a great
part of the profit from this production is being exported abroad
thanks to the movement of the capital. For example, if a foreign
citizen buys the rights to exploitation of a mine, he will pay only a
small fee to the state (in Bulgaria the Canadian company Dundee
Precious Metals pays only 1% royalties), exporting abroad a big part
of the profit. When the mine’s profits increase, the GDP is going
to rise, while GNP will show a drop in the state’s income because
the company is Canadian. The Bulgarian national product is decreasing
while at the same time Canada’ GNP is increasing.
There are lots of other problems with the acceptance of
the economic growth as a measure of prosperity. For example, GDP
includes expenses made because of natural and human caused
catastrophes which in turn are considered to be good for the economy
while in fact these catastrophes are tragic for the society. An
example of this could be the ecological catastrophe in the Mexican
Gulf in 2010 when 11 people died in the ocean and over a billion
liters of petrol were poured into the sea: this raised the GDP with
tens of millions of dollars. Each flood in Bulgaria during the last
years has lead to expenses for rescuing and restoration activities,
which make the GDP rise. This might sound unbelievable but each
natural catastrophe is highly welcome for the economic growth. The
same way the increase of illnesses among the population leads to more
expenses for drugs and hospital services which is again registered as
economic growth.
The way GDP is being calculated is also debatable. Since
1953 countries adopt the methods recommended by the SNA – The
System for National Accounts adopted by the United Nations
Statistical Commission. By the end of the 1980s only the end products
produced in the real economy were measured. In 1987 Italy was the
first European country that followed the new recommendations by the
SNA and included in its GDP the estimated production of the grey
sector and thus registering a raise of 18% literally for a day. Since
then other countries gradually include in their calculations the
“estimates” of the undeclared activity. To what extend are they
real, no one could say. It is a real scandal that from September 2014
the European Union started registering even the black sector
activity. Drugs, contraband, prostitution and corruption officially
became part of the measure for economic growth and hence for the
“development”. Until then the weapons production was considered
an “intermediate product” while since September 2014 it became an
“investment”. It is a rhetorical question whether these
activities really create welfare for the society.
I would like to complete my critic at the index for
economic growth and development by emphasizing that it does not show
in any way how the wealth is being distributed within the society and
how it is being used. A country with a strong social inequality may
register the same GDP as another country in which wealth is
distributed more uniformly.
In 1989 the wealth in Bulgaria was distributed
comparatively uniformly – there were no proprietors of big capital
and poverty was practically non-existent. But since many services
were free of charge (public health, education, textbooks,
transportation of students and pensioners) and other services and
goods were sold at state-fixed prices which sometimes did not exceed
the costs for their production (groceries, transportation,
electricity, water-supply and so on), the GDP was comparatively low
then. After the privatization and price liberalization they increased
beyond measure thus increasing the GDP as well. That is why GDP is
hardly the measure helping us depict correctly the condition of any
economy.
The witnesses to the economic catastrophe in Bulgaria,
observing the spreading poverty stifling the country, are probably
deeply confused by the claims of the economists of development
according to whom the life in Bulgaria is nowadays much better than
that in 1989 because the GDP has almost tripled (from 2449 dollars to
7498 dollars per capita).
But which index could be used in order to make a correct
comparison between the economic condition of the people in 1989 and
the one today? While examining the international statistics we come
upon one very interesting index used by FAO for decades – the
consumption of groceries per capita, measured in kilocalories per
day. This seems a very appropriate measure especially having in mind
that no one could consume kilocalories greatly exceeding the daily
consumption because of the simple physiological restriction itself.
From the FAO data we can see that in 1989 in Bulgaria were consumed
3623 kilocalories per capita daily and the country was fourth in the
world before all the Western countries (France was 8th, Italy –
9th, Austria – 11th, USA – 14th, and the average daily
consumption of the world was 2635 kilocalories per capita). FAO’s
last available data are from 2011, from which is seen that Bulgaria
has fallen from 4th to the 81st position with an average daily
consumption of 2877 – which is 25% less (the survival minimum is
2400 kilocalories). In comparison, Ghana is on 65th position.
Source
and references:
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