GDP AS A MEASURE OF ECONOMIC PERFORMANCE FAILS TO ACCOUNT FOR SUSTAINABLE DEVELOPMENT A CASE STUDY OF VIET NAM

Abstract

Gross Domestic Product (GDP) is a universal measure for economic performance. However, it has also been questioned over the years for various shortcomings. This dissertation uses Viet Nam as a case study to examine one of the main concerns regarding the use of GDP as the measure of economic progress, namely its lack of consideration for sustainable development.

Particularly, the dissertation provides background information about Viet Nam and four of its key environmental resources, namely land, water, air, and forest. The governing structures and regulations, as well as current economic activities with regards to these resources, will also be covered. It then proceeds to the quantitative analysis in which GDP is calculated using the standard framework (a simplified Keynesian framework) and the sustainability framework (established by Thampapillai and Uhlin, 1997). The qualitative analysis that follows highlights environmental challenges facing Viet Nam due to economic development and the quest for GDP growth as well the potential loss of GDP due to environmental degradation.

Based on the analysis, this dissertation concludes that the standard GDP framework is a mistaken premise that fails to account for sustainable development. As a basis for policy making, this framework could lead to policies with targets exceeding the economy’s true productive capacity. Following its argument that preserving environmental capital does not result in economic loss, this dissertation offers cross-cutting as well as sector-specific recommendations for Viet Nam to ensure the incorporation of environmental conservation and economic development.