Which countries are the ‘wealthiest’?

23 06 2022

Last week I wrote a post about various indices of country-level environmental performance, which I prefaced with a caveat that the data are a few years old.

This week I’m going to discuss national indices of economic performance and prosperity. There are indeed some surprises.

But standard metrics of economic performance at the national level almost universally fail to encapsulate the sustainable economic prosperity of its citizens. One could, for example, simply list the ‘wealthiest’ nations according to simple economic turnover by employing the standard, but wholly unsatisfactory metrics of gross domestic product (GDP) and gross national income (GNI). Even most economists admit that GDP and GNI are dreadful measures of ‘wealth’, and the differences between them are largely immaterial.

Top 5 ‘wealthiest’ nations according to per-capita gross national income: Qatar, Macao, Singapore, Kuwait, Luxembourg.

It is probably easier to view GDP as a speedometer, for it measures the speed with which an economy is contributing to the generation of goods and services (i.e., economic turnover), but it does not measure the loss of biodiversity, ecosystem services, and other environmental assets such as forests and mined resources, it does not measure the build-up of greenhouse gases or hormone-mimicking toxic chemicals, nor does it take depreciation of physical capital in our society’s infrastructure in account. As it turns out, GDP actually rises following environmental disasters such as a major oil spill because of the jobs created to clean up the mess, but it does not measure in any way the economic advantage of growing produce in your garden because the goods are not ‘traded’ in the standard market

Nor does GDP account for the disparity in wealth among a nation’s citizens, so even though most people might be poor, the existence of even a handful of billionaires can in fact raise a country’s GDP. The GDP metric is so unappealing that even the World Bank has tried to come up with better ways to measure wealth. Although it still falls short of measuring true wealth, ‘total wealth’ — measured as the present (discounted) value of future consumption that is ‘sustainable’ — tries to take into account a country’s present wealth minus damage to its non-renewable stock that is currently being exploited unsustainably (e.g., forests). As such, economic policies based on total wealth would be better able to ensure the long-term sustainability of a nation by including the ‘stock’ of existing capital that includes natural capital. 

Top 5 ‘wealthiest’ nations according to per-capita total wealth: Norway, Qatar, Switzerland, Luxembourg, Kuwait.

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The economy worse off since 1978

3 07 2013

eat money

Can’t eat money

I was only a little tacker in 1978, and as any little tacker, I was blissfully unaware that I had just lived through a world-changing event. Just like that blissfully ignorant child, most people have no idea how important that year was.

It was around that year that humanity exceeded the planet’s capacity to sustain itself in perpetuity1. As I’ve just discovered today, it was also the same year that the per-capita Genuine Progress Indicator (GPI) peaked.

Now for a little detour and disclaimer before I explain all that. I’m not an economist, but I have a dabbled with the odd economic concept and bolted-on economic sub-routine in a few models I’ve written. Some would argue that conservation (i.e., the quest and methods needed to conserve biowealth) is almost entirely an economic pursuit, for economics is the discipline that attempts to explain (and modify) human behaviour. I tend to agree insofar as we now know enough on the biological side regarding how species become threatened and go extinct, and what kind of things we need to do to avoid losing more of the life-support system provided by biodiversity. Being completely practical about it, one could even argue that the biology part of conservation biology is complete – we should all now re-train as economists. While that notion probably represents a little hyperbole, it does demonstrate that economics is an essential endeavour in the fight to conserve our home.

Almost everyone has heard of ‘GDP’ – the Gross Domestic Product – as an indicator of economic ‘performance’, although most people have little idea what it actually measures (I’m including businesspeople and politicians here). GDP is merely the sum of marketed economic activity, which is only one small facet of the economy. For example, growing a tomato and preparing a salad for your family with it is not included, yet buying a frozen meal in the supermarket is. Even an oil spill increases GDP via increased expenditures associated with clean-up and remediation, when clearly it is not a ‘good’ thing for the economy on the whole because of the lost opportunities it causes in other sectors. Read the rest of this entry »

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