Evaluating Policy Claims with Adjusted Economic Data
Imagine you are an economic advisor in 1985 reviewing a nation's economic performance over the previous 13 years. The government proudly points to its official 7.1% average annual economic growth rate as a sign of successful development policies. However, you have access to a new analysis showing that when the consumption of the nation's key natural assets (petroleum, forests, and soil) is accounted for, the adjusted growth rate is only 4.0%. Critically evaluate the government's claim of success. In your response, explain why the two different growth rates lead to vastly different conclusions about the country's long-term economic health and the sustainability of its development path.
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