From the Wall Street Journal:
South Africa has found an interesting way to bolster its gross domestic product: include illegal activities.
Stats SA in its latest GDP report expanded its survey to include previously uncovered areas of the economy such as crime, the drugs trade and illegal mining. The “non-observed element” of the economy accounted for 0.2% of GDP in 2008, it said.
“Information was obtained from administrative and enforcement records of the South African Police Service (SAPS), South African Revenue Service (SARS), other associations (e.g. SWEAT for prostitution) and information on other country experiences,” Stats SA said.
The contribution to GDP from the non-observed economy is seen steady at around 0.2% from 2002 through 2008, though it dipped to 0.1% in 2007. The calculations are used for its benchmarking revisions, but isn’t included in its regular quarterly numbers. On Tuesday, the country reported that GDP grew 0.9% in the quarter ended September, marking an end to its first post-apartheid recession.
Pressure has mounted on President Jacob Zuma, elected in April on a populist platform of poverty reduction and job creation. Unemployment rose to 24.5% in the third quarter after 484,000 jobs were lost during the three months, Statistics South Africa said last month.
Maybe the country should consider counting people who work in illegal activities to bring down its unemployment rate.
GDP is an inadequate measurement of a nation’s wealth; doing what South Africa is doing is merely rearranging the deck chairs because crime is already well-established within GDP for every nation that follows that growth measurement model