1. Indicator

(a) Name: Gross domestic product (GDP) per capita.
(b) Brief Definition: Levels of GDP per capita are obtained by dividing annual or period GDP at current market prices by population. A variation of the indicator could be the growth of real GDP per capita which is derived by computing the annual or period growth rate of GDP in constant basic producers' or purchasers' prices divided by corresponding population.
(c) Unit of Measurement: $US.

2. Placement in the Framework

(a) Agenda 21: Chapter 2: International Cooperation to Accelerate Sustainable Development in Developing Countries and Domestic Policies.
(b) Type of Indicator: Driving Force.

3. Significance (Policy Relevance)

(a) Purpose: The indicator is a basic economic growth indicator and measures the level and extent of total economic output. It reflects changes in total production of goods and services.

(b) Relevance to Sustainable/Unsustainable Development: Growth in the production of goods and services is a basic determinant of how the economy fares. By allocating total production to each unit of population, the extent to which the rate of individual output contributes to the development process can be measured. It indicates the pace of per capita income growth and also the rate that resources are used up. As a single composite indicator of economic growth, it is a most powerful summary indicator of the economic state of development in its many aspects. It does not directly measure sustainable development but it is a very important measure for the economic and developmental aspects of sustainable development, including people's consumption patterns and the use of renewable resources.

(c) Linkages to Other Indicators: As a highly aggregated composite measure, this indicator has close links with many, more disaggregated indicators. Examples would include population growth, net migration, other GDP indicators, land use change, arable land per capita, and forest area.

(d) Targets: National targets are generally oriented towards priorities, availability of resources and, in large measure, to historical economic performance. International targets are most often established by financial institutions and international organizations only for the purposes of intercountry comparison of economic performance in determining the direction of aid distribution or resource allocation projects. Country groupings to form economic entities, for example, the European Community, Organization of Petroleum Exporting Countries (OPEC), and the Benelux countries, also set international targets among constituent members to serve as guidelines in national policy priority setting. Moreover, the United Nations uses average world per capita income as a threshold in setting the level of relief allowance for countries with large population in its formulation of the scale of assessments of member states.

(e) International Conventions and Agreements: The 1993 System of National Accounts (SNA) provides international standards for national accounts.

4. Methodological Description and Underlying Definitions

(a) Underlying Definitions and Concepts: GDP as defined in the 1993 SNA can be defined in three ways: Firstly, it is the sum total value- added of all production units including all taxes and subsidies on products which are not included in the valuation of output. It is also equal to the sum of final uses of goods and services (except intermediate consumption) measured in purchasers' prices, less the value of imports of goods and services. Finally, it can be measured as the sum of primary incomes distributed by resident producer units.

(b) Measurement Methods: The current price estimates of GDP are adjusted to GDP at constant prices with the use of price deflators. Population estimates enable the conversion of total GDP to per capita levels, while exchange rates and other conversion factors are used to arrive at values based on a common unit of currency. Real GDP is derived by extrapolating total value- added in the base year with production indicators in physical terms or by deflating current price values by a price deflator.

(c) The Indicator in the DSR Framework: GDP per capita deals with the processes and patterns of economic forces. As such, it is recognized as a composite Driving Force indicator of sustainable development within the DSR Framework. However, it can also be regarded as a measure of the State of a country's economy in relation to population.

(d) Limitations of the Indicator: As a necessary condition to being a key economic performance indicator of sustainable development, one of the often-cited limitations of GDP is that it does not account for the social and environmental costs of production; it therefore is not a good measure of the level of over-all well being. For example, GDP per capital reveals nothing concerning energy and material interactions with the environment. GDP is also not considered a good measure of sustainable consumption because it does not allow for the capital used up in the production process.

There may exist some differences in national accounting and demographic reporting procedures and practices between countries. One other possible drawback could lie in the comparability of price information used in deflating current price data and technical differences in the choice of base year for the original data. Additionally, a considered basic limitation lies in the conversion of GDP into a common denomination as a result of current misalignments in exchange rates for some countries vis-a-vis the comparator currency (US dollar) particularly for those countries in transition whose market exchange rates produce unrealistic levels of GDP, making any meaningful intercountry interpretation difficult.

The conversion rates used by the UN Statistics Division (UNSD) are normally the market or blended rates of exchange obtained from the International Monetary Fund (IMF). In some cases, use is made of UN operational rates which are established primarily for the settlement of administrative transactions between host countries and the UN. In very unique circumstances the use of purchasing power parities (PPP) or price-adjusted rates of exchange (PARE) is necessary. The World Bank also uses a special exchange rate where the official exchange rate produces distortion in the dollar levels of GDP.

(e) Alternative Definitions: Economic indicators that measure the achievement of higher levels of goods and services more efficiently are better indicators of sustainable development. Consumption trends are better reflected by such indicators as Personal Consumption expenditures as used in the USA. This indicator can be derived from the SNA.

5. Assessment of the Availability of Data from International and National Sources

The indicator has no serious limitations in terms of data availability. The principal data elements for a majority of countries are mostly and regularly available from national and international sources on a historical basis. Internationally accepted conceptual guidelines, are also available to assist with the compilation of the indicator. Annual GDP data in current and constant prices are generally reported by national statistical offices or central banks in the United Nations (UN) National Accounts questionnaire and supplemented by estimates prepared by the UN as well as other international organizations such as the World Bank and the IMF. The Organisation for Economic Co-operation and Development (OECD) compiles quarterly GDP estimates for its Members. Population data are mainly obtained either through censuses or surveys. These are supplemented by growth estimates prepared by the UN Population Division.

6. Agencies Involved in the Development of the Indicator

The lead agency is the United Nations Department of Economics and Social Information (DESIPA). The lead contact is the Director, Statistics Division, DESIPA; fax no. (1 212) 963 9851.

7. Further Information

(a) Statistics and Data:

Comprehensive national accounts statistics are published by the UN in the series National Accounts Statistics: Main Aggregates and Detailed Tables. A historical series of GDP is available from the national accounts database of the UN Statistics Division.

Population data and projections are available in the World Population Prospects published by the Population Division of the UN Department of Economic and Social Information and Policy Analysis.

Exchange rates are published by the IMF in International Financial Statistics.

(b) Status of the Methodology:

The 1993 SNA provides international standards on national accounts and is the product of collaborative efforts between EUROSTAT, IMF, OECD, UN and the World Bank.

NET INVESTMENT SHARE IN GROSS DOMESTIC PRODUCT
Economic	Chapter 2	Driving Force

1. Indicator

(a) Name: Net investment share in Gross Domestic Product (GDP).
(b) Brief Definition: This indicator measures the net share of investment in relation to total production. It is obtained by dividing gross production capital formation by gross domestic product, both at purchasers' prices.
(c) Unit of Measurement: %.

2. Placement in Framework

(a) Agenda 21: Chapter 2: International Cooperation to Accelerate Sustainable Development in Developing Countries and Related Domestic Policies.
(b) Type of Indicator: Driving Force.

3. Significance (Policy Relevance):

(a) Purpose: The rate of investment measures the stimulus to economic development, reflecting the infusion of requisite capital to finance the development process.

(b) Relevance to Sustainable/Unsustainable Development: This indicator deals with the processes and patterns of economic activities. It is an important element of the sustainable development process in developing countries, aimed at increasing their partnership in the global economy. It reflects an important financial component aimed at accelerating the pace of development.

(c) Linkages to Other Indicators: This indicator is closely linked with other measures of economic development, in particular GDP per capita and share of manufacturing in GDP.

(d) Targets: National targets for investment share to GDP are usually included in government policy as a basis for budget funding programmes and for priority-setting exercises.

(e) International Conventions and Agreements: Not available.

4. Methodological Description and Underlying Definitions

Gross capital formation (gross investment) is defined in the System of National Accounts (SNA) as the total value of gross fixed capital formation plus changes in inventories and acquisitions less disposal of valuables. Fixed capital formation is the total value of a producer's acquisitions of fixed assets, less disposal, together with certain additions to the value of non-produced assets. Gross capital formation includes outlays on additions of new durable goods to stocks of fixed asset by industries, producers of government services, the private sector, non-profit services, and households, but excludes outlays of government services on durable goods for military use. It is further classified into new and existing tangible (dwellings, buildings and structures, machineries and equipment, etc.) and intangible (mineral exploration, computer software, entertainment, artistic and literary originals, etc.) assets.

However, investments in SNA terms, as in this indicator, constitute only investments on produced assets. Any expenditure on non-produced assets, for example, land or payments for education and health that enhance the quality of human capital are not included.

An alternative indicator would be one which would identify selected investment expenditures by sector, such as environmental protection, health and education, housing, nutrition etc., that are individually considered relevant to sustainable development. A second alternative would report the indicator using gross fixed capital formation.

5. Assessment of the Availability of Data from National and International Sources

The concept of gross capital formation is standardized in the SNA and therefore comparable between countries. Data is of reasonable quality and commonly available from national sources on a historical basis.

Data on gross capital formation and GDP are generally reported by national statistical offices or central banks to the UN National Accounts questionnaire. These are supplemented by estimates prepared by the United Nations Statistical Division (UNSD) as well as other international organizations, such as the World Bank and the International Monetary Fund (IMF).

6. Agencies Involved in the Development of the Indicator

This indicator was developed by the United Nations Department of Economics and Social Information and Policy Analysis (DESIPA). The principal contact point in terms of SNA references as well as data compilation on an international level is the Director, Statistics Division, DESIPA; fax no. (1 212) 963 9851.

7. Further Information

Further details on the conceptual definition of GDP are contained in the System of National Accounts, 1993.

National accounts statistics are published in the series National Accounts Statistics: Main Aggregates and Detailed Tables.

SUM OF EXPORTS AND IMPORTS AS A PERCENT OF GROSS DOMESTIC PRODUCT
Economic	Chapter 2	Driving Force

1. Indicator

(a) Name: The sum of exports and imports as a percent of Gross Domestic Product (GDP).
(b) Brief Definition: This is a measure of the openness of an economy, represented as the sum of exports and imports of goods and services as a ratio of GDP.
(c) Unit of Measurement: %.

2. Placement in the Framework

(a) Agenda 21: Chapter 2: International Cooperation to Accelerate Sustainable Development in Developing Countries and Related Domestic Policies. (b) Type of Indicator: Driving Force.

3. Significance (Policy Relevance)

(a) Purpose: The purpose of this indicator is to measure the openness of a country's economy to international trade.

(b) Relevance to Sustainable/Unsustainable Development: In general, international trade promotes better utilization of resources domestically and globally. This relationship between trade and sustainable development is specifically recognized by Agenda 21. Thus, if an economy is more open to international trade, it can benefit more from the given resources. Dynamically, the economy can also benefit from innovative technologies available throughout the world. However, since prices of internationally traded goods and services do not reflect fully environmental costs and benefits, international trade may not always promote better utilization of environmental resources. Also, while the indicator captures the degree to which an economy is integrated with the international economy, it does not show environmental effects (depletion, pollution) associated with particular material flows.

(c) Linkages to Other Indicators: This indicator is closely linked to other economic, environmental, and institutional indicators, such as GDP per capita, capital goods imports, imports and exports of hazardous wastes, sustainable development strategies, and ratification and implementation of international agreements.

(d) Targets: Not available.

(e) International Conventions and Agreements: Not available.

4. Methodological Description and Underlying Definitions

Exports and imports of goods and services are standard items in the balance of payments and national accounts. Exports of goods and services consist of sales, barter, or gifts or grants, of goods and services from residents of an economy to non-residents, while imports consist of purchases, barter, or receipts of gifts or grants, by residents from non-residents. Goods include general merchandise, goods for processing, major repairs on goods, goods procured in ports by carriers and non-monetary gold. Services include transportation, communication, travel, construction services, insurance, financial services, computer and information services, royalties and license fees, other business services, personal, cultural and recreational services, and government services. In general, exports and imports of goods are recorded at the market value of the goods at the customs frontier of the economy from which they are exported. Thus, the value of exports or imports do not include customs tariff. Exports and imports of services are valued at the actual price agreed upon between resident and non-resident.

GDP is a measure of the value created by the productive activities of the economy's residents. The GDP used for this indicator should be valued at purchasers' prices.

5. Assessment of the Availability of Data from International and National Sources

Data for this indicator is generally available. The openness of a country's economy can be derived from national accounts data on exports and imports of goods and services, and GDP in national currency terms. However, when the official exchange rate is significantly appreciated or depreciated in real terms, the openness indicator derived from national accounts data may be distorted. In such cases, the indicator can be computed from the balance of payments data on exports and imports in US dollars and GDP data converted to US dollars at the implicit exchange rate, effectively applied to actual foreign exchange transactions.

For the underlying national accounts data, the principal contact is the Statistical Division of the United Nations Department for Economic and Social Information and Policy Analysis (DESIPA); and for the balance of payments data, it is the Statistics Department of the International Monetary Fund (IMF).

6. Agencies Involved in the Development of the Indicator

The lead agency involved in the development of this indicator is the World Bank (WB). The contact point is the Chief, Indicators and Environmental Valuation Unit, Environment Department, WB; fax no. (1-202) 477 0968.

7. Further Information

Further details on the concepts and definitions for exports and imports of goods and services can be found in the IMF's 5th Manual on Balance of Payments or DESIPA's 1993 System of National Accounts (SNA). GDP definitions and concepts can be found in the 1993 SNA.

 

ENVIRONMENTALLY ADJUSTED NET DOMESTIC PRODUCT
Economic	Chapter 2	State

1. Indicator

(a) Name: Environmentally Adjusted Net Domestic Product (EDP) per capita.
(b) Brief Definition: This indicator is obtained by deducting environmental costs from Net Domestic Product and dividing it by the total population of the country of reference.
(c) Unit of Measurement: $US.

2. Placement in the Framework

(a) Agenda 21: Chapter 2: International Cooperation to Accelerate Sustainable Development in Developing Countries and Related Domestic Economies.
(b) Type of indicator: State.

3. Significance (Policy Relevance)

(a) Purpose: The trend of EDP can be used to measure sustainable economic growth. An upward trend of EDP would imply a more sustainable economic growth.

(b) Relevance to Sustainable/Unsustainable Development: Environmentally adjusted value- added facilitates the assessment of sectoral distortion in the economy. It also helps to identify the major sources of sustainable growth. Thus, trends in aggregate EDP and changes in the structural contributions to EDP provide the best measure of growth and structural change from a sustainable development viewpoint. It can help set economic instruments for internalizing the budgets of households and enterprises in order to encourage microeconomic behaviour towards environmentally sound production and consumption.

A number of factors other than produced and natural capital may affect the sustainability of trends of EDP. They include technological progress, discovery of natural resources, changes in production and consumption patterns, natural and man-made disasters, inflation, debt level and the productivity of human and institutional "capital".

(c) Linkages to Other Indicators: This indicator represents an aggregated measure which is closely linked to other economic and environmental indicators, especially in areas like technological transfer, changes in consumption patterns, and use of natural resources. It is also linked to other indicators which measure domestic product.

(d) Targets: Not available.

(e) International Conventions and Agreements: The United Nations Conference on Environment and Development (UNCED) recommended the implementation of the System of Integrated Environmental and Economic Accounting (SEEA) in all member states.

4. Methodological Description and Underlying Definitions

EDP is one of the results of the compilation of environmental accounts. Various methodologies, which are variations of the System of Integrated Environmental and Economic Accounting have been developed by the United Nations Statistical Division (UNSD) as satellite systems of the System of National Accounts (SNA), and have been tested in several countries. However, conceptually, the methodology has yet to be fully developed and widely accepted.

One aspect of the calculation of EDP consists of the valuation of environmental costs such as degradation and depletion of water, air, forests, and wilderness species. These costs are imputed costs and therefore represent estimates of the costs that would have been incurred to keep the natural environment intact during the accounting period.

Alternatively, this indicator can be calculated by adding environmentally adjusted final demand categories of consumption, net capital accumulation and (net) exports and dividing by total population of the country. Environmentally adjusted value added is the contribution to EDP by economic sectors. Another alternative indicator is represented by the savings rate as proposed by the World Bank. It is calculated using the same data, it reflects both natural and human capital, and is analytically powerful. Other satellite accounts, such as resource stocks, waste outputs, and environmental protection expenditures, offer less aggregated measures, but may be more useful and acceptable to countries.

5. Assessment of the Availability of Data from National and International Sources

Environment statistics data, such as stocks and changes in stocks of natural resources, emissions in physical terms, data on market prices, and costs of the extraction of natural resources, provide the basic information necessary for the compilation of environmentally adjusted value added and EDP. Data on emissions or emission coefficients are generally not available in developing countries. Data sources tend to be disparate, but typically include the following agencies: statistical offices; and ministries of agriculture, environment, forestry, fisheries, planning, construction. and mining; and the central bank.

6. Agencies Involved in the Development of the Indicator

The United Nations Statistical Division (UNSD) is the lead agency and is continuing to carry out several country projects in integrated environmental and economic accounting. This work is completed in cooperation with governments, and with the financial support of the World Bank, the United Nations Development Programme (UNDP), and the United Nations Environment Programme (UNEP). The contact point in UNSD is the Director, Statistical Division, the Department of Economics and Social Information and Policy Analysis; fax no. (1 212) 963 9851.

7. Further Information

Further details on EDP can be found in:

United Nations. Integrated Environmental and Economic Accounting. 1993.

DESIPA. Environmental Accounting: An Operational Perspective. Working Paper No. 1.

SHARE OF MANUFACTURED GOODS IN TOTAL MERCHANDISE EXPORTS
Economic	Chapter 2	State

1. Indicator

(a) Name: Shared of manufactured goods in total merchandise exports.
(b) Brief Definition: This indicator is defined as the percentage share of manufactured goods in total merchandise exports.
(c) Unit of Measurement: %.

2. Placement in the Framework

(a) Agenda 21: Chapter 2: International Cooperation to Accelerate Sustainable Development in Development Countries and Domestic Policies.
(b) Type of Indicator: State.

3. Significance (Policy Relevance)

(a) Purpose: The indicator is meant to represent one aspect of international cooperation, namely a country's access to and participation in the global markets for manufactured goods.

(b) Relevance to Sustainable/Unsustainable Development: The significant and growing presence in the global markets for manufactures is one element significant to sustainable development of a country. Largely stable earnings from exports of manufactures are an important source of resources for investment in sustainable forms of development. However, export strategies must be considered within the context of domestic development priorities. Trends in the indicator are important for individual countries and for cross-country comparisons.

(c) Linkages to Other Indicators: The indicator is closely linked to other economic indicators especially in the areas of international cooperation and changing consumption patterns. Such indicators would include Gross Domestic Product (GDP) per capita, and the share of manufacturing value added in GDP.

(d) Targets: No specified targets have been established for the attainment of this indicator.

(e) International Conventions and Agreements: There are no international conventions or agreements related to this indicator.

4. Methodological Description and Underlying Definitions

(a) Underlying Definitions and Concepts: The elements of the indicator that require definition are the total value of merchandise exports; and the value of exports of those product categories that can be considered to form the trade equivalent to production of manufactured goods. The first element is uniformly defined in international trade statistics. For the second element, the following sub-categories from the Standard International Trade Classification (SITC) are relevant: chemicals (SITC code 5); manufactured goods chiefly classified by material (SITC code 6); excluding non-ferrous metals (SITC code 68); machinery and transport equipment (SITC code 7); and miscellaneous manufactured articles (SITC code 8). The basic concepts involved in the definitions of the two elements are readily available from standard documentation on international trade statistics (see section 7 below).

(b) Measurement Methods: Since the indicator is based on detailed international trade statistics, measurement issues relate to general international trade statistics (see references in section 7 below).

(c) The Indicator in the DSR Framework: In terms of the DSR framework the indicator generally characterizes the state of access to export participation in global markets for manufactured goods.

(d) Limitations of the Indicator: Care must be exercised in the interpretation of this indicator within the context of overall development priorities. As with any attempt to classify manufactured goods, limitations arise from imprecisions in the present definitions of the SITC.

5. Assessment of the Availability of Data from International and National Sources

(a) Data Needed to Compile the Indicator: Only summary international trade statistics are needed to compile the indicator.

(b) Data Availability: The data described under 4a above are available at the national level for most countries on a regular basis, and in a form that allows for meaningful international comparisons.

(c) Data Sources: The primary international source for time series of internationally comparable data are the United Nations trade tapes. The most recent country information can usually be obtained from national statistical institutions.

6. Agencies Involved in the Development of the Indicator

The lead agency is the United Nations Industrial Development Organization (UNIDO). The contact point: is the Chief, Industrial Statistics Branch, Information and Research Division, UNIDO; fax no. (43 1) 232 156.

7. Further Information

(a) Further Readings:

Forstner H. and R. Ballance. Competing in a Global Economy, An Empirical Study on Specialization and Trade in Manufactures. London, Unwin Hymann, 1990.

UNIDO International Comparative Advange in Manufacturing, Changing Profiles of Resources and Trade. Sales No. E.85.II.B.9. 1986.

UNIDO. Changing Patterns of Trade in World Industry, An Empirical Study on Revealed Comparative Advantage. Sales E.82.II.B.1. 1984.

(b) Other References:

Commodity Indexes for the Standard International Trade Classification. Revision 2, Statistical Papers, Series M No.38/Rev. United Nations Publication, Sales No. E.81.XVII.3.

(c) Status of the Methodology:

The methodology for international trade statistics relevant to the present indicator has been agreed to by numerous intergovernmental fora.