Paper short abstract:

Changes in standards of GDP measurement over the past 25 years redefine the yardstick of development to fit recent strengths of developed economies. The revisions therefore constitute a form of 'kicking away the ladder,' as they inflate the economies of advanced relative to developing countries.

Paper long abstract:

The System of National Accounts - the international standard for constructing macroeconomic indicators such as Gross Domestic Product (GDP) - was created in 1953 and revised in 1968 by the United Nations. Starting in 1993 (and again in 2008), however, and reflecting the shift in geopolitical power, four organizations representing the Global North have shared the responsibility for these revisions with the UN - the World Bank, IMF, OECD and the European Union. The 1993 and 2008 revisions to the SNA include several changes to how production is measured - including the reclassification of R&D, weapons systems and owner-occupied dwellings - which provides a starkly different picture of growth in advanced economies, between-country inequalities, and the degree to which emerging economies have 'caught up' with the US and the EU. We therefore argue that the changes in GDP measurement constitute a form of 'kicking away the ladder,' i.e. redefining the yardstick of development to fit recent strengths of developed economies. Finally, the paper considers the political economy implications of the change in methodology, such as the justification of voting shares in international financial institutions and incentives for policy-makers in low-income countries.