The Changing Wealth of Nations Measuring Sustainable Development in the New Millennium Kirk Hamilton Development Research Group The World Bank

Outline The wealth of nations in 2005 What changed? Saving for the future Special topics: Intangible wealth and CO 2 Policy messages

The Wealth of Nations in 2005

Where is the wealth of Ghana? Shares of total wealth, 2005 Shares of natural wealth, 2005 Total wealth / capita: $9,500

Where is the wealth of the UK? Shares of total wealth, 2005 Shares of natural wealth, 2005 Total wealth / capita: $663,000

Composition of total wealth Natural capital is most important in low income countries—more than twice as large as produced capital In middle income countries natural capital and produced capital are roughly equal Intangible wealth dominates in all countries, especially in high income countries Shares of comprehensive wealth, by income class, 2005

Composition of natural wealth Crop Land Pasture Land Forest and Protected Areas Subsoil Assets East Asia-Pacific E. Europe-Central Asia Latin America-Carib Middle East-N. Africa South Asia Sub-Saharan Africa Percentage shares of natural wealth, by developing region, 2005

What changed?

How did wealth change from 1995 to 2005? Growth in total and per capita wealth by region Globally, wealth grew 34% in total and 17% per capita

Development & changing composition of wealth Lower-middle income countries: shares of total wealth

Change in total wealth by type of asset $ billion,

Saving for the future

Extending our measures of wealth creation

Long-run trends in genuine saving

Many resource-rich countries are consuming their wealth

How rich would countries be in 2005 if they had invested rents from resource extraction?

Above 2% population growth, net saving per capita was largely negative in 2005

Special topics: Intangible wealth and CO 2

Intangible capital consists of more than human capital All countries Developing countries OECD countries Produced capital n/s Natural capitaln/s n/s Human capital index n/s Intangible capital Elasticities of output with respect to production factors n/s – not statistically significant

Value of the net stock of historical emissions of CO 2, 2005

CO 2 efficiency is low in developing countries – scope for green growth? Value of net historical stock of CO 2 as %of GNI, 2005

“How we measure development will drive how we do development”

Policy implications Strengthen natural resource management Invest resource rents in other assets Lower carbon footprints – ‘green growth’ Invest in people Build institutions

Thank you!