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Bill Gates: how GDP understates economic growth. Ghanaian youths learn new skills on computers.

Bill Gates: how GDP understates economic growth

When Ghana updated its reporting a few years ago, its GDP jumped by 60%. Photograph: Andrew Aitchison/ Andrew Aitchison/In Pictures/Corbis Even in good financial times, development aid budgets are hardly overflowing. Government leaders and donors must make hard decisions about where to focus their limited resources. How do you decide which countries should get low-cost loans or cheaper vaccines, and which can afford to fund their own development programmes? The answer depends, in part, on how we measure growth and improvements in people's lives. I have long believed that GDP understates growth even in rich countries, where its measurement is quite sophisticated, because it is very difficult to compare the value of baskets of goods across different time periods.

The challenges of calculating GDP are particularly acute in sub-Saharan Africa, owing to weak national statistics offices and historical biases that muddy crucial measurements. Economy tracker: GDP. 28 January 2014Last updated at 10:41 ET Continue reading the main story Latest news: BBC's Declan Curry explains just what GDP stands for and why we should care The UK economy grew by 0.7% in the fourth quarter of 2013, down slightly from 0.8% in the third quarter of the year, according to the latest figures from the Office for National Statistics (ONS).

Economy tracker: GDP

The figures mean that in 2013 the economy showed its strongest growth since 2007. The ONS data for construction was down 0.3% over the quarter, despite the recent recovery in a housing market. The services sector, which represents three-quarters of economic output, grew by 0.8%. After 1992, the UK economy and average household incomes enjoyed a period of unbroken growth. But in 2008, the global financial crisis plunged the UK into its longest and deepest recession since comparable records began in the 1950s.

More than a million people lost their jobs as businesses - from shops to manufacturers and banks - either closed or laid off staff. The Rise and Fall of the G.D.P. All the same, it has been a difficult few years for G.D.P.

The Rise and Fall of the G.D.P.

For decades, academics and gadflies have been critical of the measure, suggesting that it is an inaccurate and misleading gauge of prosperity. What has changed more recently is that G.D.P. has been actively challenged by a variety of world leaders, especially in Europe, as well as by a number of international groups, like the . The G.D.P., according to arguments I heard from economists as far afield as Italy, France and Canada, has not only failed to capture the well-being of a 21st-century society but has also skewed global political objectives toward the single-minded pursuit of economic growth. “The economists messed everything up,” Alex Michalos, a former chancellor at the University of Northern British Columbia, told me recently when I was in Toronto to hear his presentation on the Canadian Index of Well-Being. Q&A: What is GDP? 26 April 2011Last updated at 12:01 ET The BBC's Declan Curry explains just what GDP stands for, and why we should care.

Q&A: What is GDP?

Quarterly GDP revisions infographic. Has GDP outgrown its use? Governments and the media obsess about it while statisticians endlessly fiddle – but what is the real point of GDP and can it ever be accurately measured?

Has GDP outgrown its use?

©Lucas Varela What do the price of hair-salon services in Beijing and sexual services in London have in common? The answer is that, depending on how you measure them – or indeed whether you measure them at all – the size of the Chinese and British economies will expand or contract like an accordion. In April, statisticians working under the aegis of the World Bank determined that China’s gross domestic product was far bigger than they had previously realised. China was, in fact, just about to overtake the US as the world’s largest economy, many years earlier than expected.

Last month, British statisticians worked some magic too. Gross domestic product has become a ubiquitous term. Coyle is a defender of GDP as a tool for understanding the economy so long as we grasp its limitations. GDP is a surprisingly new idea. Understanding GDP and how it is measured.