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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