Countries are often compared by levels of development along a continuum from industrialized, developed countries (largely in the North) to the least developed countries (in the South). The size of this North—South divide and its increase over time are repeatedly confirmed by socioeconomic indicators in reports from various intergovernmental organizations. However, the conceptual challenge is to reflect the significant diversity of industrialized and developing countries in the design and selection of sustainable development indicators and determine how it affects their universal validity.
A number of indicators are clearly biased toward industrialized countries and their stage of socioeconomic development. In the economic domain, indicators such as GDP and income per capita are usually based on data for money flows generated through wage labor in the formal economy, partly because of the difficulty of defining and measuring nonmarket and subsistence activities. GDP has been repeatedly criticized for failing to incorporate the value of the informal economy, which constitutes a significant proportion of productive activity: 55 percent (Fukami 1999; Statistisches Bundesamt 1995, 2003), even in developed countries. In developing countries, the informal economy can reach up to 90 percent. The informal economy meets many development needs, such as child care, education, subsistence food production, water supply, fuel, housekeeping, handcrafts, and other domestic products. Where environmental conditions are good and traditional rural social and subsistence systems intact, the quality of life can be quite high, even in countries classed statistically as least developed. It would be valuable to determine how paid and unpaid work differ in their contributions to social, economic, and environmental sustainability.14
Another bias linked to the level of socioeconomic development lies in data availability and the effectiveness of statistical services. Most indicators originally were developed by industrialized countries, according to their own priorities, and reflect what they do best. Countries that are less developed economically may be more advanced in areas such as social cohesion or solidarity that are not captured in standard indicators. For example, an indicator of strong family relationships within and between generations would highlight the social and economic benefits of extended families, village communities, clans, and tribes, and the costs of the high divorce rates would be more important in countries without public health care and other welfare systems where people rely on these informal security systems.
The interpretation of indicators is often biased toward developed countries as well. For example, the number of cars in an industrialized country is usually used as an indicator of air pollution and consequent impact on human health. In a developing country, on the other hand, it may indicate improved access to markets and education. Different contexts may call for different indicators that have the same meaning. For example, coronary heart disease may be a more relevant health indicator in a developed country, whereas infant mortality may be more appropriate in a developing country.15
Recognition of this problem is leading to the revision of some indices. For example, the Growth Competitiveness Index of the World Economic Forum (WEF 2004), which has previously emphasized technological development, is being redesigned to reflect competitiveness at various stages of economic development.
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