The National Wealth of Selected Countries - A Descriptive Essay

Abstract

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.national wealth; Alfred Marshall on wealth, estimating wealth, World Bank’s national wealth estimating