SDG Eight: Sharpening the Target on Economic Growth

This is one of a series of CGD blogs on tweaks to the SDG targets. 

Target 8.1 calls for rapid per capita economic growth.  As this is a vital element of sustained progress on development, it is absolutely right that a comprehensive set of development goals include a growth target.  That said, the repeated UN decades of development had limited success on declaring their way to more rapid growth. The UN ‘development decades’ of the 1970s and 1980s set goals for average real annual growth in GDP per capita in developing countries of 3.5% and 4.5%, respectively.  The ‘development decade’ of the 1960s set a goal of 5% GDP growth (not per capita) and the 1990s of 7% GDP growth.  Sadly, while the UN was ramping up global growth targets, actual developing country growth was headed in the other direction.  Hopefully the SDGs will do better.

Regardless, it is worth making a change to the language of the target.  Currently it mirrors the 1990s development decade target language of 7 percent GDP growth.  But concentrating on GDP as the measure of interest is a strange choice.  The quality of life in a country (or on the planet as a whole) is very weakly connected with absolute GDP.  Monaco has a smaller GDP than Niger but thanks to a population one four hundred and seventy-oneth as large it sees average incomes that are considerably higher.  What should matter to development targets is GDP per capita.  

Over the past ten years, LDCs have put achieved an impressive average GDP growth rate of 6.17% according to World Bank data.  The proposed target is 0.83% higher than that.  LDC’s GDP per capita growth has been slower (because of rising populations), but still a creditable 3.75%.  A similar level of ambition to the existing target language would be suggested by setting a 4.5% average annual real growth rate –mirroring the 1980 development decade language.  The proposed language change is as follows:   “Sustain per capita economic growth in accordance with national circumstances and, in particular, at least 4.5% per cent gross domestic product per capita growth per annum in the least developed countries.”