Does rapid economic growth improve the human lot? Some empirical evidence

Politicians and decision-makers in both developed and developing countries have sought to maximize economic growth on the basis of the belief that this leads to advances in the quality of life. This paper seeks to test whether this belief is well-founded. An application of the Diffusion Index to time-series data collected from a rapidly growing, low income country demonstrates that while higher national income makes for greater welfare the rate of welfare enhancement is almost independent of the rate of national income growth. On the basis of these findings, it is argued that the Gross National Product by itself may not be used as a reliable measure of human welfare. Finally, this paper suggests that in order to provide the maximum quality of life for the members of a given society, its national policy should be based on a much broader conception of welfare than is currently implied by the idea of GNP growthmanship.