The National Wealth of Selected Countries - A Descriptive Essay
What determines the wealth of nations? If anyone knew the answer to that question, no-one would have heard of Adam Smith as an economist, and for that matter all economists. Economics is really the study of wealth creation under scarcity. The reason economists and others have a hard time pinning down the causes of wealth is that wealth is costly to measure, and many factors and forces are potential determinants. This paper describes, in a simple way, wealth accounting by extending the data assembled by a recent World Bank study. The extension will benefit those seeking to run time-series, cross-section, and/or pooled data regressions to assess how wealth is determined. But even from this simple data mining exercise alone the results indicate significant increases in the wealth of the 92 countries in this sample. From the theoretical standpoint the World Bank’s expanded measure under-estimates the wealth of developing countries. Yet, even if the income (GDP) component of their wealth has fallen, total national wealth has increased. The policy implications of this essay are tentative until empirical analysis is carried; even so, the results seem to suggest that GDP is a necessary but not a sufficient requirement for wealth.
|Date of creation:||19 Aug 2005|
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- Pearce, David, 1992. "Economic valuation and the natural world," Policy Research Working Paper Series 988, The World Bank.
- Osberg, Lars & Sharpe, Andrew, 2002. "An Index of Economic Well-Being for Selected OECD Countries," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 48(3), pages 291-316, September.
- Nicholas Oulton, 2004.
"Productivity Versus Welfare; Or GDP Versus Weitzman's NDP,"
Review of Income and Wealth,
International Association for Research in Income and Wealth, vol. 50(3), pages 329-355, 09.
- Nicholas Oulton, 2002. "Productivity versus welfare: or, GDP versus Weitzman's NDP," Bank of England working papers 163, Bank of England.
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