Policymakers must reimagine the way in which economic growth is measured: WEF report

Policymakers must reconsider their priorities and put significant improvements to people's living standards at the heart of their economic policies, according to the findings of the World Economic Forum's (WEF) Inclusive and Development Report 2017.

The latest WEF report stressed that the way a country measures economic growth must be re-imagined. Rather than simply addressing levels of gross domestic product (GDP), policymakers must reconnect with its increasingly frustrated citizens and consider a wider breadth of economic tools.

"The world is basically in loud agreement that inclusive growth is the way to go but it has been much more aspiration than action frankly for the last couple of years," Richard Samans, member of the managing board at the World Economic Forum told CNBC on Monday.

"(Economic) growth is essential, it is absolutely critical but… you can borrow a business analogy here, growth is like the top line. You need top line growth as a business would but the bottom line measure of success for society (in terms) of how well their economy is performing is (an) improvement of living standards," Samans added.

'Iron law of capitalism'

Samans lamented the stance many leading economies choose to take by putting too much emphasis on exports and GDP levels rather than quality of life improvements for a nation's population. He agreed that Germany , which runs the world's largest trade surplus of $300 billion, was a typical example of this argument in practice.

The WEF's Inclusive and Development Report 2017, co-written by Samans, concluded that several countries are severely under-performing or remain relatively underdeveloped in terms of understanding and then acting upon its population's concerns.

Rising inequality is described as a largely internal challenge as opposed to an "iron law of capitalism" and could be rectified if prioritized by policymakers.

Donald Trump is scheduled to be inaugurated as President of the U.S. on Friday and Samans argued that election promises made by Trump to heavily invest on infrastructure as well as childcare benefits are "positive elements" which could boost the country's economic performance.

"On the other hand there (are) some proposals being discussed on the environmental side and also in terms of tax reform that, if not structured properly, could provide a short term boost if you will… but long term (it could) not be as beneficial for inclusive prosperity," Samans concluded.

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