By Catherine Van Rompaey and Diego Herrera
Tracking the sustainability of economic progress and measuring national wealth has been a challenge since modern economics began. Traditionally, GDP has been the primary measure of economic success, but it does not capture all productive activities, especially those provided by nature.
To answer this challenge, two decades ago, the World Bank established the Changing Wealth of Nations (CWON) series that measures comprehensive national wealth to monitor long-term economic progress through a country’s full portfolio of assets. The latest edition, CWON 2024, covers 151 countries for the 1995–2020 period.
Key findings from CWON 2024
The report offers insights into the global distribution and growth of wealth, highlighting significant disparities and trends critical for developing countries.
- Wealth Concentration: Wealth is highly concentrated in rich countries, with significant disparities across income groups. High-income countries made up more than two thirds of total nominal wealth in 2020, while middle-income countries constituted nearly a quarter. The rest of the world, where half of the world’s population lives, accounted for just 7 percent. This uneven distribution of wealth highlights the systemic challenges faced by low-income countries in accumulating and sustaining economic resources. The concentration of wealth in high-income countries can lead to a cycle where these countries continue to attract more investments and resources, further widening the gap.
- Global Growth: Between 1995 and 2020, the share of global wealth held by middle-income countries nearly doubled, indicating successful economic policies, industrialization, and improvements in human capital. However, the minimal growth in the share of global wealth for low-income countries during the same period suggests that these countries are not benefiting equally from global economic growth. The 21 percent increase in global wealth per capita over this period is a positive indicator of overall economic growth, but it hides the underlying inequalities and the uneven distribution of this growth.
Asset trends
The trends in the assets that comprise wealth reveal important dynamics:
- Produced Capital: The rapid accumulation of produced capital indicates significant investments in infrastructure, industry, and technology. This growth is essential for economic development, as it enhances productivity and supports higher living standards.
- Human Capital: The parallel growth of human capital with population growth reflects increasing labor force participation and higher returns to education, which are crucial for long-term economic sustainability. However, the quality and accessibility of these improvements can vary widely between countries, affecting their overall impact. Significant gender disparities persist, with women accounting for only 37 percent of human capital globally.
- Nonrenewable Natural Capital: Is increasing at a similar rate to population growth, although its composition is shifting from fossil fuels to minerals. The volatility in nonrenewable natural capital highlights the challenges associated with resource extraction and management. Fluctuations in commodity prices, geopolitical tensions, and environmental concerns can all contribute to this volatility, affecting the economic stability of resource-dependent countries.
- Renewable Natural Capital: The steep decline of over 20 percent in renewable natural capital over the past 25 years underscores the unsustainable exploitation of natural resources, such as forests, water, and biodiversity. Hydropower is a notable exception, showing a 23 percent increase. Marine fish stocks have experienced the most dramatic decline (over 45%). This decline poses significant risks to environmental sustainability and economic resilience, particularly for developing countries that rely heavily on natural resources for their livelihoods.
This edition of the report also explores the concept of “limited substitutability” across assets. It recognizes that a decline in one type of asset cannot always be offset by an increase in another type. Previously, the CWON methodology implicitly assumed that all assets could substitute each other. For example, a loss in natural capital could be compensated by investments in produced or human capital. However, this assumption is less valid today, as irreplaceable natural resources like fertile land and clean water are in limited supply and cannot be substituted with other assets. Experimental estimates in CWON 2024 highlight the importance of considering limited substitutability, but more research is needed before making systematic changes to wealth accounts.
Changes in global wealth per capita, by asset class, 1995–2020 – A Flourish chart
Utilizing CWON 2024 Data for Policymaking and Sustainable Development Strategies
The report’s data are highly relevant and useful for developing countries, allowing for customized country-level analyses.
- Policy Focus: By providing a comprehensive picture of a nation’s wealth, CWON data can help policymakers identify areas where investments are needed and monitor the sustainability of development patterns.
- Customized Wealth Estimates: The data can be used to develop customized country-specific wealth estimates, helping countries to better understand their economic strengths and weaknesses.
- Sustainable Development: Granular data on renewable natural capital can inform environmental policies and strategies to ensure these assets are preserved for future generations (see Overview report for a discussion on uses of the data).
- Economic Progress: Trends by type of capital can help assess if growth is happening at the expense of critical assets or if there is overreliance on certain assets, which could risk future economic progress.
The CWON 2024 report sets a strong foundation for future assessments and for countries to adopt the approach to produce their own comprehensive wealth estimates.
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