Inequality, resource depletion, and welfare accounting: Applications to Indonesia and Costa Rica

Ahluwalia and Chenery noted that the standard measures of GDP growth imply distributional weights that place greater weight on the income of richer in come groups, and proposed distribution-neutral and pro-poor alternatives. M ore recently, pilot studies by the World Resources Institute (WRI) have que stioned the sustainability of GDP growth and have introduced natural resour ce modifications to national income accounting. To date, no studies have un dertaken both revisions concurrently, creating a revised measure based on G DP but corrected for both distributional bias and resource depletion. Such a measure is derived in this paper, and its impact illustrated with data fr om Indonesia and Costa Rica, the countries studied by the WRI. (C) 1999 Els evier Science Ltd. All rights reserved.