When countries want to measure the success of their economies, they should assess human well-being instead of gross domestic product (GDP), New Zealand's finance minister, Grant Robertson, said at a World Bank’s Meeting in Washington, DC.
Robertson said that the only way to ensure a country's long-term economic growth is through investments in essential services and basic necessities like education, health care, skills training, and overall levels of happiness. And these investments are only becoming more vital as the world undergoes rapid technological change, he stressed.
“We don’t know what jobs will be there in 20 years time,” he said. “But the knowledge and learning happening now will drive success then.”
Robertson said that New Zealand's general public was the driving force behind this change in perspective.
Although the country has had strong levels of GDP growth for years, everyday people regularly point to its high levels of homelessness, childhood poverty, and polluted rivers as signs that New Zealand is failing to live up to its potential.
This public sentiment led to a shift in the government's perspective and government agencies are now expected to take human welfare into consideration when developing budgets.
“We have an economic and social case for investing in human capital,” he said, during a panel called "The Economic and Social Case for Human Capital Investments," which focused on the World Bank’s new Human Capital Project.
“If you want to build a sustainable economy, you have to take into account all of the dimensions of that," he added. “If we’re not investing in education, intergenerational skills, well-being — it will undermine your economy.”
As part of its new project, the World Bank created the Human Capital Index to measure whether or not children are reaching their full potential in countries around the world. The index takes into account a range of factors including how likely a child is to make it to age 5, how many years of schooling they complete, the efficacy of their learning environments, and rates of childhood stunting.