Markets, Productivity, and Happiness in a Historical Perspective

Economic Growth and Development: A new insight from Composite Indicators and Eurobarometer Surveys

Pagiavla Georgia, Panteion University of Social and Political Sciences

Public authorities have as objectives to foster the development, satisfaction and social fulfillment. They often use the indicators of growth trying to show that life is better under the assumption that economic growth is the main driver of development. The idea that economic growth is accompanied by social transformation can be traced back to the classical political economy. However, since the early twentieth century the study of growth has focused more in sustained increases in the level of real per capita income, because it is assumed that an increase makes everyone (on average) better off as it expands the ability to consume material goods and services. The objective of the European Union is to ensure Europe’s sustainable and steady development through balanced economic growth. Literature underlines that growth and development are related but different or even alternative processes. Also, literature finds that growth in today’s consumer society shows only marginal returns in happiness, while European Union seeks to create a competitive market economy which takes into account people’s well being and social needs. The scope of this research is twofold. First, it investigates the association of growth and development in the EU-27 by constructing three composite indicators of development (holistic development, sustainable development, human development) and comparing them with the main growth indicators (GDP per capita, employment and disposal income). Second, it investigates the perception of Europeans on economic prosperity through the Eurobarometer surveys. Economic development measurement is difficult, because there is not available a consistent measure. Moreover, econometric models are grounded on growth theories which focus on flow variables, but they are far more prominent than other methods which are grounded on developmental theories and focus on changes in economic structures. This may lead to the misconception that development depends more on growth. By, utilizing a descriptive approach and the public opinion we take a different look at existing ideas regarding the difference (and potential contrast) between growth and development. European Commission acknowledges that GDP is not a comprehensive measure of prosperity and well-being, as it does not include environmental and societal aspects of developmental progress. This work aims to contribute to the “Beyond GDP” dialogue and shed a light to the post development theory.

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Keywords: economic growth, economic development, composite indicator, eurobarometer survey, EU-27