Productivity Measures and Sustainable Prosperity

The government of Korea is striving to achieve more rapid, and sustainable, increases in economic output. We begin by reviewing measures national governments can use to monitor progress toward achieving sustainable prosperity. The various indexes each involve a comparison of some measure of total output volume with a measure of the total volume for specified input factors. The total output measure most used by national statistical agencies is gross domestic product (GDP). We recommend other output measures that would better capture exchange rate effects, efficiency gains in intermediate product use, and the depreciation of durable assets. The recommendations concerning the treatment of durables are of special relevance for monitoring progress toward sustainable prosperity. We also report on progress toward accounting for the use of natural resource assets and human environmental impacts. We conclude with some thoughts on the meaning of sustainable prosperity and options for achieving this.