Whither GDP? The Case for Inclusive Growth

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By Carolyn Gray Anderson

The Center for Global Management’s first invited speaker of the year was Grzegorz “Greg” W. Kolodko, the former Deputy Premier and Minister of Finance of Poland, a position he held from 1994 to 1997 and again in 2002-2003. CGM videotaped the event for those who couldn't attend.

Kolodko was introduced by Henry Ford II Professor of International Economics Sebastian Edwards, and the two economists’ rapport was evident as they remembered Kolodko’s first visit to UCLA in 1992 and exchanged ideas about whether to raise Europe’s retirement age.

Known as an architect of economic reform in Poland, Kolodko addressed the Anderson audience as the annual World Economic Forum began in Davos. His refrain throughout his talk, which focused on the connectedness of the world and a common interest in keeping it healthy, was: “Things happen the way they do because so many things happen at the same time.”

Kolodko just published his two-volume Whither the World? 
The Political Economy of the Future, a holistic perspective on fundamental questions about the course of future generations — politically, economically and socially. In what he describes as an interdisciplinary approach, Kolodko cautions against looking to GDP for a measurement of growth. Because growth, he insists, must be paced in a manner that keeps the world balanced. “The world economy is growing too fast,” he said, “it’s not sustainable.”

In his previous book, Truth, Errors and Lies, Kolodko sifted through economic policy to ferret out the sources of deception and its effects. His latest work asks what the economic future will be like based on a changing relationship to human capital and the world’s values concerning the environment and a sense of shared responsibility. “Globalization is irreversible,” he said. “We cannot build the future based on the values of business as usual,” and he noted that population growth, for instance, carries wildly different consequences for different places.

Taking Greece as a prime example of a precarious economy, Kolodko described a certain responsibility Europe has to keep the country in the EU and help it — with its 25 percent unemployment rate and 25 percent of its citizens living below poverty — to recover instead of letting it fail. Who is it really good for, he asked, if we are “enriching the few at the cost of many”?

But where is the trend of growing inequality being reversed? A student asked Kolodko to name a country, besides the most advanced, that he thinks is approaching balance between economics and social responsibility, and Kolodko named several: Bhutan, he said, is exemplary for its social progress, and Malaysia and Costa Rica are making strides in important areas, too.

The key to adapting to the changing values Kolodko observed is more accurate analysis of our connectedness. Simply put, “We need good economists.”

Watch CGM's video of the lecture