Global wealth grew significantly over the past two decades but per capita wealth declined or stagnated in many countries in various income brackets, says a new World Bank report on Tuesday.
This might be attributed to several reasons, according to the report, mainly the continuous increase in population, in a way that exceeds the rise in global wealth, causing a gap between the global and per capita wealth.
Going beyond traditional measures, the report uses wealth to monitor countries’ economic progress and sustainability.
The Changing Wealth of Nations 2018, which tracked the wealth of 141 countries between 1995 and 2014, revealed that human capital was the largest component of wealth overall while natural capital (such as forests and minerals) made up nearly half of wealth in low-income countries, the report found.
This is the first time the World Bank depends on substantial instruments to measure the contribution of human capital in the world wealth. Components also compose of produced capital and net foreign assets.
The report added that the past years witnessed changes in the nations’ wealth components. Therefore, the measurement instruments weren’t restricted to natural capitals and the GDP, noting that the GDP represents a vital element in measuring the level of economic progress of countries but doesn’t reflect the changes in national assets volume that is owned by the country and forms its national wealth.
Depending on GDP, individual, might lead to delusive outcome and signs about the national economy condition, added the report, therefore the best way to measure the economic performance level of any state is to measure the change of national wealth.
“By building and fostering human and natural capital, countries around the world can bolster wealth and grow stronger,” World Bank Group President Jim Yong Kim, said.
“There cannot be sustained and reliable development, if we don’t consider human capital as the largest component of the wealth of nations,” he added.