Economies around the world are varied and the wealth of the country is portrayed by its economic growth. Countries with high economic growth are generally referred to as developed countries and those with lesser growth are considered to be developing countries. Research has been conducted by sociologists, economists and psychologists to determine the link between economic growth and happiness.
Whilst it is agreed that economic growth brings wealth to the country, this report will investigate whether economic growth can bring health and happiness also.
2. What is an economy?
An economy is a system to control the income, assets, resources and wealth of a country. The production, consumption, distribution, imports and exports of goods are all part of an economy of a country. The economy is organised in such a way that it controls the prices and consumption of goods in a western society like the UK. By controlling how much is consumed and what prices are paid, the demand and supply of goods can be controlled.
2.1 The UK Economy
The UK government is also responsible for collecting various taxes. Health care, education, free meals and various benefits are provided by the Government through taxes paid. The UK economy is one of the largest 7 economies globally, therefore recognised as a developed country. The majority of countries in the east are seen as developing due to their lower economy, except Australia, New Zealand and Japan as detailed in Figure 1 (Fribbance, 2009, p. 18). The UK has various regions which are measured for its Gross Value Added (GVA).
This method is used to determine contribution made by each region to the national economy in terms of industries and production, excluding taxes. Each region is measured for its GVA per head, as a percentage of the UK average, by residence and the UK average by percentage of the workplace. London has the highest GVA and the North East the lowest, however it must be noted that London is a world city, therefore, a centre for business and finance unlike the North East, see Table 2 (Fribbance, 2009, p.27).
2.2 Economic Globalisation
The UK is classed as an “open market” where people are free to:
* Trade in goods/services with other countries.
* Import cheap clothing/electricals
* Out-source call centres/banking along with manufacturing of goods to low wage countries
(International trade levels for the UK are comparably higher than other countries, for example the OECD(2008) figures for 1992 show, the UK traded 24% of the value of its economy whereby USA only traded 10% (Fribbance, 2009, p.19)).
* Make inwards and outwards foreign direct investments (FDI) e.g.
o Land Rover, Jaguar, Corus steel, Tetley tea
Whilst this openness with TNC’s helps the global economy, some argue it’s at the loss of jobs and production in the UK (Fribbance, 2009, p.21). The UK economy growth is only possible with connections to the global economies (Pryke, 2009, p.104)
3. Economic Growth and Measurement
Economic growth brings wealth to a country. The rate of growth and level of growth are measured by FDI and Gross Domestic Product (GDP). GDP is a measurement of income per person. Between 1992 and 2003, the UK saw a large increase in both inward and outward FDI showing:
* Increased foreign assets for UK firms/households
* Outsourced manufacturing services
* Banking, IT, insurance services and consultancy growth
* Better competition in global market
By 2008 when the recession hit, the UK had become better off than 20 years earlier according to GDP figures. Table 1 shows the UK ranked 7th out of the group of 7 major developed countries in 1997 – however in 2005, UK was ranked 3rd (Fribbance, 2009, p.24-26) with a GDP of $32,860 (US), a rise of 47%.
3.1 Growth & Environmental gains
Economic growth and rising GDP are perceived signs of:
* Well performing governments
* Improvement in standards of living – “UK better off”
* Increases investment in technology
* Energy Efficiencies
3.2 Environmental Losses and Repair
The negative impacts of growth and GDP rise are seen as:
* Increase in consumption leading to increased waste – cheap clothing/electrics
* Pollution increase from production overseas and transportation to western countries
* Domestic energy consumption increase – central heating, electrical goods
The UK is becoming a weightless economy – by importing good from countries like China, Co2 emissions in the UK are reduced but may be higher in China due to increased production in factories without the technology or money to reduce unnecessary pollution (Fribbance, 2009, p.104). BBC online (2007) reported the UK imported 6.5 million tonnes of goods from China the previous year, and 14% of China’s emissions of Co2 are from exports to the US (Fribbance, 2009, p. 35).
Developed countries have signed up to the Kyoto agreement to reduce emissions by 5% below the 1990 level by 2012. The UK has set its own additional targets and has already met them. Climate change affects everyone globally and therefore, needs to be addressed by all.
4. National Well-being, health and happiness
With an enviable GDP, the UK citizens are regarded as “better off” than many and therefore, should be healthy and happy. However, this may not be the case. UK citizens earn twice as much than 40 years ago and live longer, however only 85% are satisfied with their standard of living. The BBC claims people are less happy now than in the 1950’s (Fribbance, 2009, p. 13 & 14). It appears although we have more choice, luxury items, cheaper imports and electrical goods, the nation is suffering from unhappiness.
Richard Wilkinson, author of “The Spirit Level theory” states that income is unequally distributed in the UK, EU, US and Japan and no longer brings health and well-being in developed countries. The inequalities between the rich and poor create problems of:
* Drug abuse
* Crime increase and imprisonment
* Less compassion/empathy for poor
* Violence amongst poor
* Mental illness
Economist Richard Layard argues the UK is 3 times better off than 50 years ago but unhappier as a nation. He believes whilst income is important, human relationships are more important and the government must address this to improve well-being and health. Layard argues concerning factors of high GDP are:
* Pressures at school
* Economic anxiety
* Status pressures
* Adaptation to increased income/fear of loss of income
* Mental illness
* Inequalities, feelings of unfairness and trust issues
However, Stevenson & Wolfers (2008) and Goklany (2007) claim that developed nations are better off in every way today (Fribbance, 2009, p. 47)
GDP has become an obsession with the G7 & G8. New measures need to be introduced like Gross National Happiness (GNH) a measure used by Bhutan where they value happiness over economic growth.
Bhutan is a country where happiness is paramount, but to achieve this, they have banned:
o Plastic bags
o Consumerism – no imports
Whilst it could be argued that there is no freedom or choice and lessened economic growth, the monarchy believe spirituality and happiness is far more important (“Economic wealth and happiness”, 2009, track 2).
4.1 Alternative Measurements
Several indicators are considered better measures of well-being:
* Gross National Income (GNI) measures income per head, rather than average per head.
* Human Development Index (HDI) measures life expectancy, literacy and education enrolment with GDP – UK ranks 108th globally (table 3, Fribbance, 2009, p.39).
* Happy Planet Index (HPI) measures environmental damage, satisfaction, life expectancy – Vanuatu tops the table (Fribbance, 2009, p42-43).
Economic growth and rising GDP does not bring well-being and health to a nation. People in the UK are earning more than ever, however are not happier regardless of the ability to consume. There are more illnesses prevalent in today’s high earning society than 40 years ago when income was up to 3 times less. GDP alone cannot measure the well-being of a nation; indicators need to measure inequalities also. In a bid to increase economy, pollution has been exported overseas resulting in increasing levels of Co2 emissions by developing countries, leading to greenhouse gases and climate change. The UK like other developed countries has an issue of inequality which needs to be addressed for national happiness to be achieved.
“Economic wealth and happiness” (2009) Exploring Social Lives [Audio CD 1], Milton Keynes, The Open University.
Fribbance, Ian (2009) “The changing UK economy: making a greener and happier society” in Bromley, S., Clarke, J., Hinchliffe, S. and Taylor, S. (eds) Exploring Social Lives, Milton Keynes, The Open University
Goklany, I (2007) cited in Fribbance, Ian (2009) “The changing UK economy: making a greener and happier society” in Bromley, S., Clarke, J., Hinchliffe, S. and Taylor, S. (eds) Exploring Social Lives, Milton Keynes, The Open University
Layard, R (2003) cited in Fribbance, Ian (2009) “The changing UK economy: making a greener and happier society” in Bromley, S., Clarke, J., Hinchliffe, S. and Taylor, S. (eds) Exploring Social Lives, Milton Keynes, The Open University
OECD cited in Fribbance, Ian (2009) “The changing UK economy: making a greener and happier society” in Bromley, S., Clarke, J., Hinchliffe, S. and Taylor, S. (eds) Exploring Social Lives, Milton Keynes, The Open University
Stevenson and Wolfers (2008) cited in Fribbance, Ian (2009) “The changing UK economy: making a greener and happier society” in Bromley, S., Clarke, J., Hinchliffe, S. and Taylor, S. (eds) Exploring Social Lives, Milton Keynes, The Open University
Table 3 cited in cited in Fribbance, Ian (2009) “The changing UK economy: making a greener and happier society” in Bromley, S., Clarke, J., Hinchliffe, S. and Taylor, S. (eds) Exploring Social Lives, Milton Keynes, The Open University