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Imputing Away the Ladder: Implications of Changes in GDP Measurement for Convergence Debates and the Political Economy of Development

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  • Jacob Assa
  • Ingrid Harvold Kvangraven

Abstract

What are the implications of changes in measurement standards of GDP for global convergence debates? What are the political economy implications? To answer the former question, we examine the changes in national accounting standards from the early 1990s. Revisions to the System of National Accounts (SNA) – the international standard for constructing GDP – include several major changes to how production is measured, including the reclassification of financial intermediation services, R&D, and weapons systems as productive activities – all areas in which countries in the West has had an advantage in recent decades. In addition, there has been an increase in the proportion of imputations in the 1993 and 2008 revisions, which privileges the economic structures of the West. Overall, we find that these changes have had the effect of boosting the GDP of the West relative to the rest of the world and thus to an underestimation of global convergence compared to previous measures of GDP. To answer the second question, the paper unpacks the political economy implications of national accounting standards favouring Western economies along several axes, including the impacts on voting shares in international institutions, domestic policy incentives and epistemological debates about sustainable development.

Suggested Citation

  • Jacob Assa & Ingrid Harvold Kvangraven, 2021. "Imputing Away the Ladder: Implications of Changes in GDP Measurement for Convergence Debates and the Political Economy of Development," New Political Economy, Taylor & Francis Journals, vol. 26(6), pages 985-1014, November.
  • Handle: RePEc:taf:cnpexx:v:26:y:2021:i:6:p:985-1014
    DOI: 10.1080/13563467.2020.1865899
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    Cited by:

    1. Michael Hudson, 2021. "Finance Capitalism versus Industrial Capitalism: The Rentier Resurgence and Takeover," Review of Radical Political Economics, Union for Radical Political Economics, vol. 53(4), pages 557-573, December.
    2. Rotta, Tomás N. & Kumar, Rishabh, 2024. "Was Marx right? Development and exploitation in 43 countries, 2000–2014," Structural Change and Economic Dynamics, Elsevier, vol. 69(C), pages 213-223.
    3. Semieniuk, Gregor, 2024. "Inconsistent definitions of GDP: Implications for estimates of decoupling," Ecological Economics, Elsevier, vol. 215(C).

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