Tracking the Sputnik Economy

Edward B Barbier

doi:10.2202/1553-3832.1833

Abstract

In his 2011 State of the Union address, President Obama stressed investment in infrastructure, education and clean energy in the U.S. economy to "win the future." Edward Barbier of the University of Wyoming argues that to track the progress of such an investment strategy will require replacing GDP per capita as the main economic indicator with a Net Domestic Product (NDP) measure that is "adjusted" for real depreciation or appreciation in the reproducible, human and natural capital stock.

Highlights

I n his 2011 State of the Union Address, President Obama stressed the urgency of “winning the future” by comparing the current economic situation to 50 years ago, “when the Soviets beat us into space with the launch of a satellite called Sputnik.”
Just as the orbits of satellites have to be tracked properly in space, we need better economic indicators to judge the effectiveness of such an investment strategy
Since 1991, the U.S Bureau of Economic Analysis has used real per capita Gross Domestic Product (GDP), the market value of all final goods and services produced within the United States, as the basis for measuring growth in the economy

Summary

Introduction

I n his 2011 State of the Union Address, President Obama stressed the urgency of “winning the future” by comparing the current economic situation to 50 years ago, “when the Soviets beat us into space with the launch of a satellite called Sputnik.” Spurred by the 1960s space race, the United States “unleashed a wave of innovation that created new industries and millions of new jobs.”. Since 1991, the U.S Bureau of Economic Analysis has used real per capita Gross Domestic Product (GDP), the market value of all final goods and services produced within the United States, as the basis for measuring growth in the economy. The problem with GDP as an economic indicator, is that it does not reflect changes in the capital stock underlying the production of goods and services.

Results

Conclusion