LONDON, ENGLAND, June 8, 2001: The world’s poor may be sinking deeper into poverty, according to a new report that turns traditional insights into poverty reduction upside down. This is in stark contrast to the widely used — and potentially misleading — data based on Gross National Product (GNP) and the Human Development Index. The measure of GNP — the monetary value of all goods and services provided by the economy — could be fatally flawed as it disregards vitally important factors such as the depletion of natural resources which have a dramatic impact on the survival ability of the future generations. Pakistan’s GNP, for example, grew at a healthy 2.7% per year, implying a more than doubling of living standards between 1965 and 1996. The report’s alternative measure of wealth shows that Pakistan’s living standards have actually almost halved over this period. The assumption that a steady growth in GNP automatically leads to a reduction in poverty could have led to a decrease in the amount of development aid, loans and grants allocated to any one country.
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