Georgetown University From the SelectedWorks of Josep M. Colomer February 19, 2018 It is about Wealth, not (only) Income: What the World Bank says and does not say Josep M. Colomer Available at: https://works.bepress.com/josep_colomer/ 153/
Development is about per capita wealth, not only income: What the World Bank says and does not say JOSEP M. COLOMER 2018 The idea was floating for a while but it had not been operative until now. The paradox is that individuals and companies are evaluated by both their income and their wealth (for example, when asking for a loan or a mortgage). But regarding the economy, countries are usually evaluated only by their income (or GDP). Everybody can understand that wealth is an indicator of future sustainability of income growth. But the problem was with measuring wealth. Now the World Bank has published a much-improved report on wealth especially regarding estimates of human capital, which will surely be the starting point for new discussions, policy revisions and further research. The Changing Wealth of Nations 2018 (G-M Lange, Q Wodon, K Carey eds.) gives estimates of wealth for 141 countries. However, the data are given only by countries in alphabetical order, in contrast to other World Bank s data, including on per capita income, which are routinely published as sorted by values and are widely used and reproduced as rankings of countries. There might have been some political restraint to publish a new ranking of countries, this time for wealth, but you will find my own elaboration below.
For every country, the WB s report analyzes natural capital, human capital (which is the driver of development), and produced capital, to which foreign assets are also added. The mechanism for development is the investment of rents from natural resources into factors increasing human capital (infrastructures, education, health), which leads to increases in products and wealth. According to the WB: This shows that resources alone cannot guarantee development: strong institutions and good governance are needed to ensure that rents are invested and not used entirely for consumption. Some very interesting data are given for changes in wealth during the twenty-year period 1995-2014. We can see that wealth has increased worldwide, especially un middle-income countries. Decreases in wealth, however, point out also to very interesting cases: the central African countries along the Equator, Mexico in the Americas, Greece, Portugal and Spain in Europe, and a couple of countries in turmoil, such as Turkey and Ukraine. After reading the printed report, I went to the World Bank website, and with copy and paste, and a little of Excel (while some people around were wasting their time watching the silliest Olympic sport ever: curling), I have been able to produce a Table of countries ordered by their per capita wealth and the annexed per capita income, and the two Graphs for countries above and below the world average, which show some intriguing results. It is not a surprise that high per capita wealth and income are strongly correlated for most rich countries, including Norway and Switzerland at the top, almost all the European Union members, the United States and Canada,
plus Japan and Korea. In contrast, the very wealthy oil producers do not make it as well regarding income, in relative terms to other countries, especially Qatar, Kuwait and Saudi Arabia. Some routinely repeated myths should also be revised: given their wealth, Singapore does it very well, but Malaysia not at all. Regarding the countries at lower levels of wealth than the world average, more surprises emerge. Some countries with bad fame, such as Argentina Mexico and Turkey (in spite of the two latter s losses during the last twenty years), appear as having relatively good levels of per capita income in relation to their poverty in wealth. The opposite lower income than wealth, always in comparative terms can be observed for countries in permanent chaos such as Turkmenistan and Congo, as well as, to some extent, Colombia after many years of violent conflict (now finally receding). China is wealthier than India, but the former does not transform its wealth into income as efficiently as the latter. The World Bank report acknowledges: The role of social capital, institutions, and governance is explored only tangentially in this volume, and could be the topic of further work. An invitation to follow.
Table. Wealth and Income per capita, per countries, 2014. COUNTRY Code WEALTH INCOME Norway NOR 1671756.078 104860 Qatar QAT 1597124.616 82750 Switzerland CHE 1466756.697 86200 Luxembourg LUX 1288606.988 75280 Kuwait KWT 1123143.555 49770 Australia AUS 1046785.264 64740 Canada CAN 1016593.094 51760 United States USA 983279.8688 55430 Sweden SWE 886129.1762 61030 Denmark DNK 854330.8723 63530 Iceland ISL 825857.2137 48160 Netherlands NLD 792396.4421 51330 Singapore SGP 775196.0173 55720 Germany DEU 729063.65 47710 Finland FIN 726421.6963 48990 Austria AUT 694616.1879 50400 United Kingdom GBR 647693.5495 43740 Belgium BEL 645968.9181 46940 France FRA 641707.487 42950 Ireland IRL 627255.9848 46860 Japan JPN 571926.5999 43940 Saudi Arabia SAU 512868.745 25570 Italy ITA 427465.5338 34760 Korea, Rep. KOR 424052.1259 26800 Slovenia SVN 351776.1375 23550 Spain ESP 342470.343 29300 Malta MLT 303804.2176 24300 Oman OMN 277573.6907 19490 Portugal PRT 274452.7813 21260 Bahrain BHR 270310.664 21010 Estonia EST 258903.139 18840 Uruguay URY 254600.6582 16230 Malaysia MYS 239202.86 11010 Chile CHL 237712.8753 15140 Latvia LVA 236906.452 15310 Greece GRC 227925.2245 21990 Slovak Republic SVK 213211.4161 18110 Gabon GAB 199901.4696 9360
Brazil BRA 188883.047 12020 Russian Federation RUS 188714.6047 14670 Kazakhstan KAZ 180911.3685 12090 Lithuania LTU 169045.9774 16020 Costa Rica CRI 166985.4149 10200 Hungary HUN 165518.8592 13460 Suriname SUR 161690.183 9350 Poland POL 154931.8353 13680 Croatia HRV 147544.6201 13150 WORLD 168580 10922 Turkmenistan Panama Colombia TKM PAN COL 146830.9679 136125.4349 129288.555 7310 11520 7970 Argentina ARG 126516.055 12260 Mexico MEX 110471.2778 10190 China CHN 108171.8144 7520 Romania ROU 107021.7795 9600 Ecuador ECU 102451.2082 6130 Iraq IRQ 101704.7749 6700 Belarus BLR 99685.45177 7600 Dominican Republic DOM 97257.29016 6110 Mauritius MUS 97018.19876 9790 Botswana BWA 95797.41531 7350 Paraguay PRY 85574.86158 4390 Azerbaijan AZE 85340.61987 7700 Namibia NAM 84397.68806 5740 Peru PER 81931.33356 6360 Bulgaria BGR 81877.85917 7720 Mongolia MNG 79003.56406 4240 South Africa ZAF 77348.20788 6750 Jamaica JAM 71766.1946 4940 Guyana GUY 69970.53531 4040 Congo, Rep. COG 68779.1793 2520 Lebanon LBN 65148.33472 8300 Thailand THA 62598.93908 5750 Belize BLZ 58871.92383 4390 Ukraine UKR 56053.44041 3560 Albania ALB 53107.23721 4440 Armenia ARM 52893.84449 4150 Swaziland SWZ 52670.09677 3670 Macedonia, FYR MKD 52209.93988 5200 Papua New Guinea PNG 50489.34168 3040 Jordan JOR 49286.93729 3870
Bolivia BOL 49235.46196 2870 Indonesia IDN 46918.6777 3620 Turkey TUR 45998.00211 12590 Tunisia TUN 45150.38858 4130 Maldives MDV 44991.04922 9460 Honduras HND 44778.3437 2040 Georgia GEO 44327.39206 4490 El Salvador SLV 44130.87124 3790 Guatemala GTM 43139.98139 3450 Tajikistan TJK 42285.62192 1340 Zambia ZMB 40965.40945 1770 Morocco MAR 40488.2909 3050 Bosnia Herzegovina BIH 40485.78566 5170 Lao PDR LAO 39306.96224 1840 Egypt, Arab Rep. EGY 38469.82287 3180 Nigeria NGA 37408.04217 2980 Nicaragua NIC 37083.94897 1940 Moldova MDA 35380.41576 2560 Cameroon CMR 31397.89234 1510 Solomon Islands SLB 31245.15865 1820 Philippines PHL 30823.25015 3470 West Bank and Gaza PSE 30567.43308 3180 Mauritania MRT 29379.64608 1380 Vietnam VNM 27368.14464 1860 Ghana GHA 25044.19568 1580 Cote d'ivoire CIV 24484.68159 1460 Kyrgyz Republic KGZ 24428.86946 1250 Yemen, Rep. YEM 22908.58533 1440 Pakistan PAK 22181.65626 1390 Rwanda RWA 21619.33067 700 Central African Rep. CAF 21055.25861 340 Chad TCD 20076.86684 980 Kenya KEN 19412.19208 1260 Zimbabwe ZWE 18957.61733 900 Togo TGO 18923.74751 540 India IND 18211.05597 1560 Tanzania TZA 17450.60092 920 Mali MLI 17165.30683 810 Cambodia KHM 16932.62545 1020 Haiti HTI 15040.41682 820 Sierra Leone SLE 14741.64301 690 Nepal NPL 14368.36198 730 Uganda UGA 13732.08436 660 Ethiopia ETH 13124.76495 550
Senegal SEN 13085.08862 1030 Bangladesh BGD 12713.76547 1070 Burkina Faso BFA 12323.37556 680 Congo, Dem. Rep. COD 12256.00088 410 Niger NER 11622.74079 3040 Malawi MWI 10442.48035 350 Liberia LBR 10226.71119 370 Madagascar MDG 9237.243492 440 Guinea GIN 8942.747578 680 Comoros COM 8835.670202 830 Mozambique MOZ 7717.731787 620 Burundi BDI 7579.091518 290 Gambia, The GMB 5207.72905 460 Source: Josep M. Colomer, Wealth and Income per capita in the world. 2018. With data from World Bank