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What GDP can’t tell us

Politicians pay too much attention to this outdated indicator of economic growth

By Diane Coyle   February 2014

The 1870s and 1880s were a period of rapid industrialisation and innovation. Alexander Graham Bell’s telephone, Nikola Tesla’s twophase induction motor, Herman Hollerith’s punched cards, the electric fan, the seismograph, the motorcycle—all of these advances were made in this period.

So presumably the “new economy” that these inventions helped bring about can be seen in the economic statistics of the 19th century. But no: the Statistical Abstract of the United Kingdom for 1871-1885 contains just a few pages of figures on the new technologies of the period—textile factories, railways and so on. In contrast, there are almost 200 pages of…

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