Balanced Development Index for European Countries

The paper will discuss an idea behind composite Balanced Development Index (BDI) and its application to assess socio-economic development in European OECD countries since beginning of the XXI century. BDI was initially developed for Poland and recently modified for international comparisons. Its conceptualization can be placed in broad “beyond GDP”, “quality of life” and “human flourishing” theoretical traditions. So far, various indexes constructed and applied in these traditions either have neglected economic aspects of development at all, or have grossly overemphasized its social aspects. BDI is beyond but not apart of GDP, since GDP constitutes one of its components. Moreover, BDI gives equal weight to economic and social aspects of development. It is composed of four middle-level composite indices measuring: (a) functioning of the country’s economy in its external (international) surrounding, (b) the domestic (internal) economic situation, (c) public predictions of future economic and social situation, and (d) the current social situation, quality of life included, measured by both public evaluations and objective social indicators. The paper compares the development in all these four spheres and the socioeconomic development as a whole in all European OECD countries. The analysis shows that the best time for European countries in XXI century was right before the last economic crisis, and that people grossly overreact to actual changes, especially in terms of their predictions. The changes in GDP and comprehensively measured socio-economic development were almost parallel before the crisis, but there is a recently growing gap between rapidly rising GDP and much less changing BDI. It may be concluded that: (a) BDI reflects changes in socio-economic development much better than GDP; (b) post-crisis economic growth takes place to a significant extend at the cost of slower improvement of human conditions. In addition to these general conclusions, the paper will discuss intercountry differences.