2.5.1 Why are we concerned with the rate of economic growth? As the recent recession demonstrated, a sharp contraction of economic growth led to a great deal of social hardship - unemployment rose rapidly and many of those not made unemployed had their working hours and wages cut. In addition, the risk of unemployment led to much uncertainty and subsequently reduced consumption in many households, especially those with high debts.
2.5.2 It is through economic growth that we are able to create jobs and improve living standards (as currently measured) across generations, particularly with an increasing population. Economic growth enables governments to spend more on health care, infrastructure and other public goods and it provides a social stability that de-growth has not. There is more to human well-being than simply improving the physical standard of living and this chapter discusses other ways to measure this. However, the stability of the economy and its ability to provide employment for those who want it remains a key foundation for human well-being. Economic growth (as measured) is at the heart of this process.
2.5.3 Economic performance and progress can be measured in a number of different ways. Most often, we use measures of total economic output, income or expenditure, such as Gross Value Added (GVA) at a regional level or Gross Domestic Product (GDP) at a national level. These measures give a good indication of overall economic activity and provide the basis for the growth figures that are widely quoted. Output can be compared across countries and over time and its methodology is well established.
2.5.4 This chapter focuses on regional GVA but also draws on a number of alternative measures including household income and the Regional Index of Sustainable Economic Well-being (R-ISEW). A broader understanding of progress in the region can be gleaned from indicators included in the Labour Market chapter (such as employment, wages and skills) and in the other chapters in the report.
