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20 April, 2016

GDP as a trick for masking neo-colonialism

We have seen often the Western financial institutions to present the "improvement" of economic indexes as a proof for the improvement of the economy. But what about the lives of the people?

In numerous cases, the improvement of the Gross Domestic Product (GDP), a key index used by the mainstream economists, does not depict the improvement of the lives of millions. Furthermore, the neoliberal policies imposed by the IMF and the World Bank in many regions, proved to be a total disaster in every aspect, including the GDP and other economic indexes. Only a characteristic example is the Russian economy at late 90s. As Joseph Stiglitz describes in his book Globalization and Its Discontents :

Globalization and the introduction of a market economy has not produced the promised results in Russia and most of the other economies making the transition from communism to the market. These countries were told by the West that the new economic system would bring them unprecedented prosperity. Instead, it brought unprecedented poverty: in many respects, for most of the people, the market economy proved even worse than their Communist leaders had predicted. The contrast between Russia's transition, as engineered by the international economic institutions, and that of China, designed by itself, could not be greater: While in 1990 China's gross domestic product (GDP) was 60 percent that of Russia, by the end of the decade the numbers had been reversed. While Russia saw an unprecedented increase in poverty, China saw an unprecedented decrease.


The radical reform strategy did not work: gross domestic product in post-1989 Russia fell, year after year. What had been envisioned as a short transition recession turned into one of a decade or more. The bottom seemed never in sight. The devastation-the loss in GDP was greater than Russia had suffered in World War II. In the period 1940-46 the Soviet Union industrial production fell 24 percent. In the period 1990--99, Russian industrial production fell by almost 60 percent-even greater than the fall in GDP (54%).

Daniela Penkova in her article Bulgaria in the trap of neoliberalism, provides an interesting information concerning the replacement of the Gross National Product (GNP) index with the most "convenient" Gross Domestic Product (GDP) in 1990 by the main carriers of neoliberal globalization:

GDP was adopted by the World Bank and the International Monetary Fund in 1990 replacing the index Gross National Product (GNP). The difference between the two indexes is important and explains the reason for the substitution: GDP measures the production within a territory and GNP considers the citizenship. When a privatization is carried out, the production is being performed on a country’s territory (and thus is being reported as GDP) but a great part of the profit from this production is being exported abroad thanks to the movement of the capital. For example, if a foreign citizen buys the rights to exploitation of a mine, he will pay only a small fee to the state (in Bulgaria the Canadian company Dundee Precious Metals pays only 1% royalties), exporting abroad a big part of the profit. When the mine’s profits increase, the GDP is going to rise, while GNP will show a drop in the state’s income because the company is Canadian. The Bulgarian national product is decreasing while at the same time Canada’ GNP is increasing.

In other words, the GDP index was inserted not only to allow the Western institutions to present a fake improvement (yet many times unsuccessfully as described above) for the economies who adopted the Western neoliberal model after the fall of the Soviet Union, but also to cover up the invasion of the Western multinationals, which made huge profits, by exploiting natural resources at the expense of the national economies. What we could call a new type of colonialism.

Therefore, GDP improvement is used as an excuse for massive privatizations, sell-off public property to the neo-colonial multinationals.

Greece should be examined as a really special case. After six years of devastating policies imposed by the EFD-IMF axis of destruction, the economy has lost nearly 25% of GDP, unemployment remains at unprecedented levels, the social state is close to collapse. Yet, the EFD-IMF sociopaths insist on further measures, demanding an impossible primary surplus! According to latest information, the Brussels bureaufascists demanded additional measures to be activated automatically, in case that the Greek government will not achieve 3.5% primary surplus by the end of 2018, which everyone knows it's impossible.

In the Greek case, the financial dictators do not bother to keep any pretexts because both the numbers and the reality for millions of Greeks destroy every attempt to present a "success story". After Draghi's financial coup and the intention of the IMF economic hitmen to proceed in a similar "event" in case that the Greek government will choose to resist this time, the neo-colonialism cannot be masked.

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