At the beginning of his mandate, the new President Mauricio Macri defined that the poverty index would be the KPI by which his administration would be measured.
A more than valid indicator to evaluate the performance of a president in a country that when he took office had just over 30% of its inhabitants living in poverty.
Unfortunately, by the end of his presidency, poverty reached 35.5% of the population and this was probably one of the reasons why he lost the 2019 elections.
For those who are not familiar with the acronym, the KPI (Key Performance Indicator) are the Key Performance Indicators, that is to say that their monitoring will help to understand if you are on the right track to meet the goals and objectives set.
KPIs must be:
Clear in what you want to measure
Measurable to be able to observe their evolution
Realistic and achievable
Aligned with the rest of the strategic objectives
Defined in a specific time frame
Typical KPIs for analyzing the evolution of a country are: GDP:
GDP. GDP is the total value of all goods and services produced in a country over a period of time (usually one year). It is the most widely used indicator to measure economic growth and national production. If GDP grows at a faster rate than the population, it is considered a positive sign of development.
Human Development Index (HDI): The HDI considers variables such as life expectancy, education and per capita income. It measures the general well-being of the population and its access to basic services.
Investment: Investment in infrastructure, education, health and technology is crucial for a country's sustainable development.
Energy consumption: Increased energy consumption reflects industrial development and quality of life.
Favorable trade balance: A surplus in the trade balance indicates that the country exports more than it imports, which can be a sign of economic development.
Both the fiscal deficit and inflation are circumstances that run parallel to the traditional indicators used to analyze a country's economic development.
The fiscal deficit is not a direct indicator of economic development, but rather a reflection of a government's fiscal policy at a given time that can have both negative and positive effects, depending on the context and how it is handled.
Positive Effects: If the deficit is used to finance investments in infrastructure, education or health, it can have a positive impact on long-term economic growth.
Negative Effects: On the other hand, a sustained fiscal deficit can lead to an increase in public debt and a higher interest burden, which could limit spending in other important areas and potentially slow economic growth.
On the inflation side it can influence development, however, it is not a direct indicator as it can be:
Controlled Inflation: moderate and stable inflation can be a sign of a healthy and growing economy. It allows prices and wages to be adjusted in a predictable manner, which can encourage investment and consumption.
High Inflation or Hyperinflation: High levels of inflation can be detrimental to the economy, as they erode the purchasing power of the currency, discourage savings and investment, and can lead to economic uncertainty.
Deflation: On the other hand, deflation, which is a generalized fall in prices, is also undesirable, as it can indicate weak demand and a contracting economy.
Clearly, each government should select the KPIs according to the moment and circumstance it is going through.
Without prejudice to this, it is essential to remember that only with:
economic growth, its KPI being GDP, and
increase in employment, as measured by the unemployment rate
decrease in poverty and indigence, according to the benchmark indicators
investment in infrastructure, which is calculated according to the public and private works executed each year.
promotion of savings and investment in local currency, measurable through deposits in financial institutions.
development, training and care of people, which is measured by indicators such as birth and death rates, literacy, university graduates, etc.
favorable trade and financial balances, which can be seen in both the balance of trade and the balance of payments.
The economies of countries grow, social conditions improve and, consequently, this is what citizens expect from their rulers.
To assimilate a nation's finances to those of a company or family could limit the possibilities and tools that countries have to meet their objectives.
Planning horizons are very different. Families plan for years, while countries must plan for decades or centuries.
The implications of decisions have different scopes in their effects, since in families they influence only their environment, while in a country they affect the entire population.
A country that generates trust can count on the support of its people and the international community for a long time. In the case of the family, trust is more related to who leads the family than to the family tradition.
Probably, the selection of KPIs defines the success or failure of a management.
If doctors were to solve bacterial infections by simply reducing fever, the symptoms would probably be prolonged, causing unnecessary suffering to the patient who could have received an antibiotic.
If a government understands that the way to measure its performance is through the treatment of symptoms and not their causes, it may move away from the real issues to be addressed and prolong the suffering of a people.
There is only one order, people first, numbers second.
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