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

Jacob Assa; Ingrid Harvold Kvangraven

doi:10.1080/13563467.2020.1865899

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

Jacob Assa, Ingrid Harvold Kvangraven

Politics

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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.

Original language	English
Pages (from-to)	985-1014
Journal	New Political Economy
Volume	26
Issue number	6
DOIs	https://doi.org/10.1080/13563467.2020.1865899
Publication status	Published - 7 Jan 2021

Bibliographical note

© 2021 Informa UK Limited. This is an author-produced version of the published paper. Uploaded with permission of the publisher/copyright holder. Further copying may not be permitted; contact the publisher for details.

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10.1080/13563467.2020.1865899

Imputing Away the Ladder: Implications of Changes in GDP Measurement for Convergence Debates and the Political Economy of Development
© 2021 Informa UK Limited. This is an author-produced version of the published paper. Uploaded with permission of the publisher/copyright holder. Further copying may not be permitted; contact the publisher for details.
Accepted author manuscript, 1.04 MB

Cite this

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

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.",

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