1. Where is the Wealth of Nations? Measuring capital for the 21 st century The World Bank October 2005

2. Why measure wealth? A useful model: Development as portfolio management. A useful model: Development as portfolio management. What is the composition of the portfolio? How efficiently is each element of the portfolio being managed? How efficiently is one asset being converted into another? What is the composition of the portfolio? How efficiently is each element of the portfolio being managed? How efficiently is one asset being converted into another?

3. Elements of the portfolio Produced capital Produced capital Natural resources (minerals, forests, land) Natural resources (minerals, forests, land) Human capital Human capital Institutions / governance Institutions / governance

4. Kenya ($/capita)

7. Genuine or adjusted net saving Sub-Saharan Africa - Adjusted Net Saving reveals a different story from traditional measures of saving

9. Conclusions Natural capital is a larger share of total wealth than produced capital in low income countries Natural capital is a larger share of total wealth than produced capital in low income countries Nearly 70% of natural capital in low income countries is agricultural land Nearly 70% of natural capital in low income countries is agricultural land The value of total natural wealth per person actually rises with income The value of total natural wealth per person actually rises with income When resource depletion and population growth is taken into account, most poor countries face declining wealth per capita When resource depletion and population growth is taken into account, most poor countries face declining wealth per capita

10. What should we do? Support improved natural resource management in low income countries Support improved natural resource management in low income countries Help countries to maintain soil quality Help countries to maintain soil quality Reduce incentives to over-exploit natural resources, particularly living resources Reduce incentives to over-exploit natural resources, particularly living resources Assist the poorest countries with economic reforms – increased efficiency will boost both GDP and saving for the future Assist the poorest countries with economic reforms – increased efficiency will boost both GDP and saving for the future Help build human capital and stronger institutions Help build human capital and stronger institutions