The wealth of nations, revised World Bank: New ways to reckon just how well-off countries are

September 23, 1995

ECONOMISTS have traditionally totted up gross national product (the goods and services a nation produces) and divided by the population to find the GNP per capita. Nations are ranked accordingly. By that system, for what it's worth, the U.S. is the ninth richest country -- after Luxembourg, Switzerland, Japan, Sweden, Denmark, Norway, Iceland and Austria, but ahead of France, Germany and everywhere else.

Now World Bank experts have proposed an alternative method. This quantifies "produced assets," (the old GNP plus infrastructure), but as only one-fifth the value in a new accounting system proposed for discussion.

The other four-fifths are more interesting. There is "natural capital," such as oil reserves, minerals and trees. Since estimates of oil in the ground are always going up and Brazil's rain forest is being burned away, this would be subject to change. And then there is "human resources," by which people are not merely counted but evaluated by nutrition, education and health.

A fourth measure is under consideration, but its proponents have not agreed on a way to measure it. That would be the social institutions that affect wealth-making capacity. Clearly that is a matter of opinion, even if it is profound opinion, and subject to change every decade as intellectual fashions change.

The purpose is to make nations conscious of the impact of development by quantifying environmental degradation. It emphasizes the "sustainable" in sustainable development. By the tentative new way of reckoning, the U.S. has sunk from ninth to 12th, not much of a fall. Australia replaces Luxembourg as No. 1.

Certainly, natural resources are part of a nation's real wealth. So are its people's skills, health and motivation. But World Bank experts are trying to quantify the unquantifiable. All this is for a conference in which other experts will have a go at criticism. Meanwhile, GNP per capita may not be all there is, but at least with it you know where you stand.

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