Report - UNDP Russia

Chapter 8The Energy Industry and SustainableDevelopment Indicators8.1. In searchof a new developmentdimensionThe global economic crisis has shownonce again that traditional developmentindicators need to be adjusted. Humanity hasbeen held hostage to economic and financialindicators, which often ignore or distort realeconomic, social and environmental processes.The crisis happened because distorting financialand economic mirrors had been used in decisionmakingprocesses.The most widely used economicmeasure in the world – GDP – is a primeexample of an indicator, which is inappropriatein a sustainable development perspective. Mostcountries (Russia included) still measure theirdevelopment achievements by the yardstick ofGDP. But growth of GDP thanks to the resource(energy) sector can prove unsustainable forcountries with social problems and largenatural resource endowment, of which Russiais a typical example. Many leading Russianexperts are agreed that most of GDP growth upto the present has been caused by a favorableexternal environment, and primarily by high oilprices 1 . So high GDP indicators have beenmainly based on depletion of natural resourcesand transformation of the Russian economyinto an energy and raw materials appendage ofthe global economy. The depth of the currentcrisis in Russia can be mainly explained by thefact that Russia has fallen into the ‘energy andraw materials’ trap. The GDP indicator fails toreflect major social problems, and it can groweven in a context of growth of incomeinequality, disease, mortality, etc.Before the crisis, progress and growthin the world and in Russia were usuallyidentified with GDP growth and maximizationof profit, financial flows and other financialindicators, while the quality of growth and itscosts (social and environmental) were mostlyignored.However, the need to develop newindicators for social and economic progress hasbeen long recognized by the world community.New conceptual and methodologicalapproaches to measurement of social andeconomic progress appeared as early as theend of 1980s and beginning of 1990s, offeringalternatives to the traditional indicators GDP,GNP and per capita income. The role of the UNin this process deserves to be stressed. Theconceptual approaches and specific indicators,which were developed under the UN aegis,have made a huge contribution to the theoryand practice of human development, offeringnew priorities for humanity. Two new theories –human development and sustainabledevelopment – have made the biggestcontribution. Both were forged within UNstructures and were supported by all membersof the Organization, which has given themofficial international status. It is very importantthat these conceptual approaches have beenreinforced by specific indicators, of which thebest known are the Human Development Index(HDI), Millennium Development Goals, andSystem of Sustained Development Indicators.Creation of the Human Development Index(HDI) in the 1980s was specifically intended as acounterweight to GDP.Other international organizations (theWorld Bank, Organization for EconomicCooperation and Development, EuropeanCommunity, World Wildlife Fund, etc.) have alsoparticipated in this work. The World Bank createdthe Index of Adjusted Net Savings, which reflectsthe social, energy and environmental aspects ofdevelopment in a more adequate way. Mostdeveloped countries now have their own systemof sustained development indicators.If the Russian Government wants toachieve its long-term social and economic1See, for example, A.G. Aganbegyan ‘Necessary Conditions for the Future Growth of Russia’ in the book -Transitional Economies in thePostindustrial World: Challenges of the Decade (materials of the international conference). M.: Institute for the Economy in Transition,Academy of National Economy under the Government of the Russian Federation, 2006, pages 148-150.143