From Kuznets to the 2025 SNA, the history of economic measurement is one of useful approximations. The approximations are now too rough.
In 1934, Simon Kuznets delivered a report to the US Congress — National Income, 1929–1932 — that gave governments, for the first time, a single number with which to size up an economy. The idea was straightforward: aggregate the market value of all goods and services produced, and you have a reliable proxy for national welfare. It was, by the standards of the Depression-era data landscape, a remarkable achievement (Kuznets, 1934).
Kuznets helped give governments a systematic way to estimate national income — a precursor to the GDP-centred accounting framework that followed.
Kuznets himself was sceptical of how broadly his tool would be applied. In his report he warned Congress directly: ‘The welfare of a nation can scarcely be inferred from a measure of national income’ (World Economic Forum, 2021). The warning went unheeded. Following the Bretton Woods conference in 1944, GDP became the standard tool for sizing up a country’s economy.
The problem is not that GDP is poorly constructed for what it was designed to do. It is that the economy it was designed to measure no longer resembles the economy we actually have.
Counting the costs
GDP measures market transactions. It counts manufactured goods, traded commodities, and priced services. On this it does a decent but flawed job. Accuracy can and should improve.
GDP does not count what has no market price — which, it turns out, includes a significant share of economic activity, particularly in lower-income countries.
The International Labour Organization estimates that unpaid care work — childcare, elder care, domestic labour — is worth around $11 trillion a year, or approximately 9% of global GDP. None of it appears in national accounts. Natural capital presents a similar problem. A government that clears a forest and sells the timber records output. A government that preserves that forest and benefits from its carbon sequestration, watershed regulation, and biodiversity records nothing. As one assessment of natural capital accounting notes, ‘the most politically influential measure of national economic activity — GDP — does not, and was never intended to, account for the full value of the stock and flows from natural capital’ (Vardon et al., 2022, p. 1).
The informal economy adds a further distortion. In sub-Saharan Africa, the informal sector accounts for more than 80% of employment (Waris, 2026). Economic activity in this sector is systematically undercounted, meaning that the apparent GDP of many low-income economies understates output.
The consequences of this undercounting are not confined to statistics. The measurement framework shapes what creditors lend on, what credit-rating agencies score, what the IMF deems sustainable, and what governments feel free to spend. A country whose balance sheet omits its natural resources, its renewable energy potential, and the productive value of its population may be assessed as poorer than it is.
Better barometers
The measurement community has recognised the problem. In March 2025, the UN Statistical Commission adopted a revised System of National Accounts — the first comprehensive update in seventeen years. The 2025 SNA treats the depletion of natural resources as a cost of production for the first time, recognises renewable energy resources as economic assets, and classifies data as an asset (Waris, 2026).
These are meaningful changes. They are also incomplete. The 2025 revision encourages nations to develop extended accounts that reflect the value of unpaid care work, but these efforts are typically viewed as ‘complementary’ to traditional growth metrics, with no evidence that they challenge prevailing economic paradigms or inspire transformative policy (IISD, 2025). The core accounts — the ones that drive credit assessments and IMF programme design — remain largely unchanged. Many broader welfare and sustainability measures still sit in satellite or extended accounts.
More comprehensive alternatives are advancing, if not yet mainstreamed. The World Bank’s Inclusive Wealth framework attempts to measure a country’s total capital stock — produced, human, and natural — rather than its annual output flow. The UN System of Environmental-Economic Accounting (SEEA) provides established methodologies for valuing ecosystem services and resource depletion, and is now referenced in the 2025 SNA (Vardon et al., 2022). Several countries produce satellite accounts for unpaid household production using time-use surveys, with updated methodological guidance provided in the 2025 SNA (Zwijnenburg, 2026). The World Bank’s Human Capital Index captures the productive potential of a country’s population in a form that can, in principle, inform lending decisions.
The Spring Meetings of the IMF and World Bank in April 2026 demonstrated that the institutions can move fast when measurement is deemed a priority. The World Bank launched a creditor-debtor reconciliation exercise aimed at unmasking liabilities that countries had not disclosed — a response to Senegal, where $13 billion in unreported debt had come to light (Waris, 2026). The resources and coordination that exercise required are not categorically different from what a serious asset-side accounting effort would demand.
We can also learn from perhaps the most creative solution to measuring how well a country is doing. The Kingdom of Bhutan famously measures Gross National Happiness (GNH), based on nine domains and 33 indicators, recognising that money can’t buy happiness.
Kuznets built a useful but imperfect tool for a long-ago economy. To measure what matters today, we need barometers that are more accurate and which measure new things.
References
Foreign Policy (2011) ‘GDP: A Brief History’, Foreign Policy, 3 January.
IISD (2025) ‘The Care Economy in Beyond GDP Paradigms’, SDG Knowledge Hub, 26 September.
Kuznets, S. (1934) National Income, 1929–1932. Washington, DC: United States Government Printing Office / National Bureau of Economic Research.
Vardon, M., Lucas, P., Bass, S., Agarwala, M., Bassi, A.M., Coyle, D., Dvarskas, A., Farrell, C.A., Greenfield, O., King, S., Lok, M., Obst, C., O’Callaghan, B., Portela, R. and Siikamäki, J. (2022) ‘From COVID-19 to Green Recovery with Natural Capital Accounting’, Ambio, 51(5), pp. 1017–1030.
Waris, A. (2026) ‘Hidden Debts, Missing Assets: What the Spring Meetings Forgot’, UNU Centre for Policy Research, 11 May.
World Economic Forum (2021) ‘Stakeholder Capitalism: A Brief History of GDP and Its Use’, World Economic Forum, 13 December.
Zwijnenburg, J. (2026) ‘Tracking Economic Well-being in the 2025 System of National Accounts’, Statistical Journal of the IAOS.
