Assessing the beneficial effects of economic growth: The harmonic growth index

Abstract

In this paper we introduce the multidimensional notion of harmonic growth as a situation of diffused well-being associated to an increase of per capita GDP. We say that a country experienced a harmonic growth if during the observed period all the key indicators, proxies of the endogenous and exogenous forces driving population well-being, show a significantly common pattern with the income dynamics. The notion is operationalized via an index of time series harmony which follows the functional data analysis approach. This Harmonic Growth Index (HGI) is based on comparisons between the coefficients from cubic B-splines interpolation. Such indices are then synthesized in order to provide the global degree of harmony in growth inside a country. With an accurate selection of the key indicators, the index can be used also to rank countries thus offering a useful complementary information to the Human Development Indexes from UNDP. An exemplification is given for the Indian economy.