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Poor giants

J Brauer | © Stone Garden Economics

Nigeria “rebased” the calculation of its gross domestic product, or GDP. According to press reports, its GDP jumped by an astonishing 89 percent, simply by updating the statistical basis of its number-collection effort from a base year of 1990 to a base year of 2010. Reportedly, Nigeria now captures the market activity of 10 times as many businesses as before, including activity of entire industries, such as mobile telephony, that back in 1990 hadn’t been counted at all but are rather large economic players today.

With its numbers fixed, Nigeria has surpassed South Africa as Africa’s largest economy. In 2013, Nigeria’s economy was valued at having produced around half a trillion U.S. dollars’ worth of goods and services.

But shared out among 170-odd million people, Nigerians still are among Africa’s poorest. In this, it shares an important feature with other economic giants such as Brazil, Russia, China, India, and Indonesia. Hefty in absolute terms, their per capita income is relatively small. Brazil’s for instance lacks behind even that of Argentina, let alone Chile. Far better to be an economically tiny Norway or New Zealand.

Beyond the story of Nigeria’s rebased GDP, however, lies a deeper concern: If even major countries, international financial institutions (such as the International Monetary Fund and the World Bank Group), and economics as a profession still struggle to adequately measure something as fundamental as the total annual value of all goods and services produced in an economy, what can one really say about a country’s economic development path and about the relative success or failure of certain economic policies?

I have long suggested, tongue-in-cheek, that a country’s level of development can best be assessed by the depth and quality of its statistical services. On that score, Nigeria has progressed. But it, and others, still have a long way to go.

J Brauer is Professor of Economics, James M. Hull College of Business, Georgia Regents University, Augusta, Georgia, USA.

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