This presentation is based on a forthcoming IMF Working Paper that will be published in October 2017. Most studies measure economic success by studying convergence in income– i.e. GDP per capita. By that measure, Asian countries, led by China and other dynamic economies, have been successful in bridging gaps in per capita incomes in recent decades. But it is well known that GDP per capita does not fully capture economic welfare (Tobin and Nordhaus, 1972). This study updates Jones and Klenow (2016) who use a micro-founded index of economic welfare that includes consumption, leisure, life expectancy and inequality, to look at economic progress in a broad sample of countries between 2007 and 2014. The results demonstrate that welfare grew more quickly than income for most countries over the period. However, for some populous middle-income Asian countries in which GDP per capita grew very quickly, welfare lagged. We then add environmental factors to the index, including greenhouse gas emissions and a measure of sustainability, to illustrate how important the use of the natural environment is for welfare in certain countries.
