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Genuine savings : leading indicator of sustainable development?

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  • Vincent, Jeffrey R.
  • Ferreira, S. (Susana)

Abstract

The World Bank recently began publishing estimates of countries' “genuine savings”: a comprehensive measure of net investment across all forms of capital (natural and human as well as produced). This article presents the first empirical investigation of the consistency of the Bank's estimates with the hypothesis that net investment should equal the difference between a country's average future consumption and its current consumption. Results show that the Bank's estimates are consistent only with weak versions of this hypothesis and then only for developing countries. Moreover, a simple autoregressive-integrated-moving-average (ARIMA) model outperforms any net investment measure, comprehensive or conventional, as a predictor of the difference between current and future consumption. In sum, the Bank's net investment estimates tend to move in the same direction as the difference between current and average future consumption in developing countries, but they have little value for predicting the magnitude of this difference.

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Bibliographic Info

Paper provided by University College Dublin in its series Open Access publications from University College Dublin with number urn:hdl:10197/869.

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Length: 18
Date of creation: Apr 2005
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Publication status: Published in Economic Development and Cultural Change (2005-04) v.53, p.737-754
Handle: RePEc:ner:ucddub:urn:hdl:10197/869

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Keywords: Sustainable development; Economic indicators; Environmental auditing;

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References

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Citations

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Cited by:
  1. Géraldine THIRY, 2011. "Beyond Gdp: Conceptual Grounds of Quantification. The Case of the Index of Economic Well-Being (IEWB)," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2011048, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  2. Purnamita Dasgupta & Shikha Gupta, 2008. "Measuring Sustainability with Macroeconomic Data for India," Macroeconomics Working Papers 22149, East Asian Bureau of Economic Research.
  3. Purnamita Dasgupta & Shikha Gupta, 2008. "Measuring Sustainability with Macroeconomic Data for India," Working Papers id:1574, eSocialSciences.
  4. Giles Atkinson & Kirk Hamilton, 2007. "Progress along the path: evolving issues in the measurement of genuine saving," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 37(1), pages 43-61, May.
  5. Hamilton, Kirk & Ruta, Giovanni & Tajibaeva, Liaila, 2005. "Capital accumulation and resources depletion - a Hartwick rule counterfactual," Policy Research Working Paper Series 3480, The World Bank.
  6. Mechler, Reinhard, 2009. "Disasters and economic welfare : can national savings help explain post-disaster changes in consumption ?," Policy Research Working Paper Series 4988, The World Bank.
  7. Hamilton, Kirk, 2005. "Testing genuine saving," Policy Research Working Paper Series 3577, The World Bank.
  8. Ferreira, Susana & Hamilton, Kirk, 2010. "Comprehensive wealth, intangible capital, and development," Policy Research Working Paper Series 5452, The World Bank.

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