Is GDP an Appropriate Indicator of Economic Performance and Social Progress in the Context of Globalization?

The article deals with the ability of the GDP indicator to interpret and capture economic performance, social progress and sustainable economic growth. Given the fact that the construction of indicators such as GDP does not monitor the quality of population, environmental changes or changes in stocks of non-renewable natural resources, it is necessary to take this into account (GDP is primarily an aggregate of production) and look for indicators that would allow a more complex analysis of not only economic performance, but also its social and environmental aspects. Some proposals for how to assess the sustainability of economic growth are summed up in the second part of the paper. This part of the paper is also devoted to the description of the Index of Economic Well-Being (Sharpe, Osberg). This section deals with the possibilities of measurement of households´ living standards and it also describes the Index of Economic Welfare (Sharpe, Osberg). This index takes account of other aspects of households’ quality of life (social inequality, social risks, etc.). The substance of a controversial problem called "phantom GDP" (imaginary GDP) is introduced in the last section of the paper. This effect has been described by some authors in connection with possible impacts of globalization on economic performance. The effect of "phantom GDP" is associated with a potential impact of outsourcing and offshoring on economic performance of home countries of multinational companies.