Methodological approaches to the definition of a country’s public welfare

Abstract

The article describes the main methodological approaches to assessing the national social wealth. The authors believe that evolutionary changes in the global economy have started a new era, which will transform the traditional world economic system. It has been established that in the conditions of transformational restructuring of the world economic system as a whole, as well as national economic systems, in particular, there is a need to change the criteria for assessing their level of economic development. It has been shown that the traditional macroeconomic indicator of the gross national product (GDP), which is still actively used as a measure of national wealth and the leading classification tool of breaking down countries into wealth groups, thus defining the conditions for their cooperation with international organizations, is limited. It is has been proved that monetary indicators are the basis for assessing the level of national wealth of countries, which allows unilaterally estimate the level of their social wealth. Proceeding from the fact that social wealth can be fully estimated taking into account its social component, the effectiveness of national economic systems is analysed on the basis of such models, namely: Pareto optimum and Nash equilibrium. It is proved that the welfare of nation should be considered as the main economic goal of the functioning of national economy. It is established that in the process of evolutionary development of the world economy, understanding of the elements of welfare has changed (replacement of physiological needs with the level of smartphone battery charge and access to WI-FI). It has been proved that economic growth (on the basis of GDP and GDP per capita) does not always lead to progress in the social sphere, which requires the use of new indicators. The article considers the economic efficiency of using social and inclusive development indices that combine economic and social components of social wealth. It is proved that alternative indicators of public wealth assessment are not free from disadvantages, which, on the one hand, are related to the complexity of calculation, and, on the other hand, the lack of a developed methodology for taking into account the whole spectrum of problems in the social sphere and the sphere of environmental protection. It has been established that the imperfection of the existing methodological instrumentarium places in question the universality of new indicators for assessing the level of public welfare. It is predicted that based on the revolutionary type of development of the world economic system, under the influence of rapid development of information technologies, indicators of assessment of the level of social welfare will be modified to meet the needs of the age. * This article was translated from its original in Ukrainian. 1 Molchanova Ellana Yuriivna — Ph.D., Associate Professor, Associate Professor at the Department of International Economics, Deputy Dean at the Faculty of International Economics and Management of Kyiv National Economic University named after Vadym Hetman. Sphere of scientific interests: new economic order, globalization of economic development, global economic integration. E-mail: ellanam@ukr.net Kovtoniuk Kateryna Volodymyrivna — Ph.D., Associate Professor, Associate Professor at the Department of International Economics, Kyiv National Economic University named after Vadym Hetman. Sphere of scientific interests: European integration, global economic integration, new economic order, digital economy, economic growth. E-mail: k.kovtoniuk@gmail.com Savych Oleksandr Petrovych — Ph.D., Associate Professor at the Department of Marketing, Kyiv National Economic University named after Vadym Hetman. Sphere of scientific interests: automotive marketing, industrial marketing, marketing management, purchasing marketing, sales management. E-mail: savych@kneu.edu.ua IEP, No 30, (2019) pp. 44–69 © Ellana Molchanova, Kateryna Kovtoniuk, Oleksandr Savych, 2019 «All rights reserved» ISSN 1811-9832/2019/No 1 (30) ELLANA MOLCHANOVA, KATERYNA KOVTONIUK, OLEKSANDR SAVYCH 45 METHODOLOGICAL APPROACHES TO THE DEFINITION OF A COUNTRY’S PUBLIC WELFARE