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Measuring the wealth of nations
1Environment Department, The World Bank, Washington DC, USA. khamilton@worldbank.org
Environmental Monitoring and Assessment
|July 16, 2003
Summary
Sustainable development hinges on managing national wealth, including produced, natural, and human resources. Effective wealth management, akin to portfolio management, is key for long-term economic growth and sustainability.
Area of Science:
- Environmental Economics
- Development Economics
- Resource Management
Background:
- Development sustainability is intrinsically linked to shifts in per capita wealth.
- National wealth comprises produced assets, natural resources, and human capital.
- Understanding wealth composition is crucial for assessing development sustainability.
Purpose of the Study:
- To estimate the wealth of nations, categorizing it into produced assets, natural resources, and human resources for nearly 100 countries.
- To analyze the composition of national wealth across different income levels and resource export profiles.
- To propose a framework for sustainable development based on wealth management principles.
Main Methods:
- Estimation of national wealth components (produced assets, natural resources, human resources).
- Comparative analysis of wealth composition across diverse countries.
- Economic modeling to link wealth management to sustainable development.
Main Results:
- Human resources constitute the dominant form of wealth in most nations.
- In low-income natural resource exporters, natural resources and produced assets represent equal shares of total wealth.
- Cropland is the primary component of natural wealth in low-income countries.
Conclusions:
- Sustainable development requires strategic management of national wealth portfolios.
- Saving rents from exhaustible resources and sustainably managing renewable resources are critical.
- Investment in produced assets and human capital is essential for long-term sustainability.