World Bank takes new approach to shine light on wealth of nations

David Pilling in the FT:

More than two dozen countries saw their wealth per capita fall in the 20 years to 2014, according to the most comprehensive attempt so far to produce a “balance sheet” of nations’ assets.

The World Bank study seeks to provide a more comprehensive picture of economic progress than gross domestic product data alone.

It tracks four different types of capital for 141 countries between 1995 and 2014: produced capital (such as roads, machinery and buildings); human capital (based on estimating the present value of a labour force’s future earnings); financial capital (net foreign assets); and natural capital (mainly sub-soil energy resources, minerals, forests and agricultural land).

Using the methodology, there was a big increase in per capita wealth in Asia during those years, driven by capital formation in China and India. Sub-Saharan Africa, the only region to go backwards, experienced a slight fall in per capita wealth, largely as a result of continued high birth rates in many countries that offset a rise in nominal wealth. In contrast to the more positive GDP numbers, the data showed the poorest African countries “shearing away” from the rest of the world, said Paul Collier, professor of economics and public policy at the University of Oxford’s Blavatnik School of Government.

More here.