Before the onset of the current meltdown in the world economy, Africa was believed to have scored encouraging GDP growth compared to the previous decade. In spite of this, however, we often see a deep-rooted poverty, probably more than anytime before. This scenario attests to the fact that economic growth per se cannot guarantee human welfare.
Gross National Product as a measurement of economic scale and quality of life does not appear to be the best mechanism, as grants, aid, loan and other types of financial transfer from donor countries are included in the GNP of a given nation; the growth that governments claim to have scored gives a misleading picture. This becomes apparent when grants and loans are less accessible in times of economic crisis like the one witnessed these days or when a relation of a given and receiving country with donors cools down.
The second problem with GNP is its lack of comprehensiveness. Instead of looking to the origins of the growth scored and its direct or indirect impact on the society, it only compares the amount of money secured this year against the previous years. By doing so, it overlooks measuring the diversity of the economy, the general public’s participation in the national economy, and its impact on the livelihood of the population.
Who could have ever thought of Africa with its rich natural resources remaining poor? I think no one, but it is nonetheless the reality in the continent today. Export of primary products is the major source of hard currency of Africa, and still it dominates the economy besides involving only a small portion of the population. An undiversified economy means low participation of the population which restricts the majority from reaping the benefits of economic activity. Even worse, the meager revenue collected from narrow economic activity goes to the few individuals engaged in political and business activities.
These days, some countries are often reluctant to embrace GNP as a good measurement of a given economy. Hence, they have developed their own scale that lays more emphasis on the quality of life than per capita income. Although Eritrea gives emphasis to economic growth as a means to improve the quality of life of the citizenry, the country does not entirely depend on GNP in measuring the achievement registered as regards quality of life improvement.
Despite the relatively low economic growth Eritrea has registered within the last few years, it has nevertheless attained commendable improvement in terms of human development index. Education and health services are accessible to the majority of citizens, while child mortality and malaria death rate is among the lowest in Africa. Clean potable water has equally been made available to almost all sections of the population, and life expectancy has shown improvement from 38 to 53 in the case of men and 61 to 65 that of women respectively. Hence, Eritrea is on the right path towards achieving the Millennium Development Goals (MDGs).
All the aforementioned improvements as regards quality of life are not because of high economic growth rate that the nation has scored over the last few years. Rather, it is attributed to the Government’s commitment to distribute every earned cent to all sections of the population. However, this does imply that economic growth plays vital role in promoting improved quality of life. If Eritrea had had a double digit economic growth along with its distribution-oriented policy, it would undoubtedly have shown miraculous growth that would have enabled almost all Eritreans to get out of the poverty line.
Generally speaking, Eritrea’s development experience proves that the secret to development lies in equitable wealth distribution, and not double digit GDP growth.