Gross Domestic Product or GDP has long been used as the measurement of the economic health of nations and in recent years it has frequently been described as an outdated, flawed and narrow measure.[1]
In recognition of this, Exrade SRL the R&D lab of Trakti Ltd, IACCM EMEA LTD (now World Commerce and Contracting), InfoCamere and Macrocosm Ltd are delighted to announce the award of a contract by the EU Commission to continue ground-breaking research on applying new methods to the measurement of economic value – this study is called “Modelling the EU Economy as an Ecosystem of Contracts”.
Modern economies are held together by innumerable contracts.[2]
These words were used in the Press Release when Oliver Hart and Bengt Holmstrom were awarded the Nobel Prize for Economics in 2016 for their work on contract theory. It is in recognition of this finding that the EU Commission are pursuing this pioneering study which provides an opportunity to re-think how the economy works and how we can measure the true value of national wealth.
In recognising the work of Hart and Holmstrom, the Royal Swedish Academy of Science observed the extensive nature of societies’ contractual relationships. Those between shareholders and top executive management, an insurance company and car owners, a public authority and its suppliers, or shop owners and consumers.
This study allows us to build on the first Feasibility Study that was undertaken in 2018 by Exrade SRL. Now we will be working on developing a framework that draws on today’s digital technologies to model the economy as an ecosystem of contracts and apply this to several diverse use cases based on real economic data from contracts and transactions, what we call the Open Trust Fabric.
Through this exciting work we will assess the structure of contractual networks and how the impact of digitization and greater efficiency and transparency in contracting can help us to reimagine the meaning of “wealth”, assess its resilience to shocks and create a clearer understanding of where true economic value is created across nations.
[1] https://www.weforum.org/agenda/2019/10/gdp-is-an-outdated-measuring-stick-for-the-new-platform-economy/ – https://www.worldfinance.com/strategy/why-gdp-is-no-longer-the-most-effective-measure-of-economic-success
[2] Extract from the Press Release from the Royal Swedish Academy of Science.
