Statistics for Measuring Growth and Structural Change International Forum on Monitoring National Development September 2011 Beijing, PRC Douglas H. Brooks Asian Development Bank

Traditional measures of growth and structural change National income gross domestic product gross national income 2 Employment and GDP shares of industry agriculture manufacturing services

But there are inherent limitations in these measures Growth: National income (Stiglitz and Sen 2009) Sustainability Quality of products Market development Inequality 3 Structural Change: Employment or GDP by sector share Factor endowments Factor specificity Informal sector Competition

These limitations translate to inadequate understanding of the process of structural change and growth How endowments influence the optimal structure of an economy and its growth pattern Channels through which binding constraints affect structural change and growth The role of the informal sector in structural change and growth The role of the government in structural change and growth 4

Wish list: Disaggregated accounting of factors of production Balance sheet of a country’s wealth 5 Channels through which binding constraints affect structural change and growth. Market structure information of industries Regular firm and enterprise surveys How endowments influence the optimal structure and growth pattern.

Wish list: Regular Informality surveys (folded into LFS) Informality by industry 6 The role of the informal sector in structural change and growth The role of the government in structural change Addressing market failures o Time use surveys o Addressing information asymmetry o Market structure o Policy coordination o Risk protection (insurance, safety nets) Active industrial policy?

Meanwhile, conventional measures can be complemented with other existing indicators Focus on households (Stiglitz and Sen 2009) o Wealth and disposable income o Per capita vs. median income Information from household surveys Other indexes (ex. HDI) 7

8 Inclusive Growth Growth productive jobs and economic opportunity Growth productive jobs and economic opportunity Governance and Institutions Access to  education, health, and other social services Social safety nets The FIGI is one such effort ADB’s “Framework for Inclusive Growth Indicators” presents 35 indicators of inclusive growth /pdf/KI2011-Special-Supplement.pdf

Other issues that can be addressed in the short term are… Regularity of household surveys Expansion of existing household surveys Institutional quality indicators 9

In the medium and longer horizon… IOs and SUTs Balance sheet approach to the wealth of nations Disaggregated information on factors of production Time use surveys 10