DI Digest Idea 1 Jan 96

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1. The Real Wealth of Nations

After a long procession of flavour-of-the-decade development strategies, is the World Bank finally getting its act together? A provocative new study launched with some fanfare at the Bank's Third Annual Sustainable Development Meeting proclaims that true wealth is more than Gross Domestic Product (GDP). The new calculus turns the old way of thinking about development on its head by recognizing the value of natural resources, environmental protection, education and health - all traditionally undervalued aspects of economies that nonetheless help deliver long-term growth. Using the new sustainable wealth of nations measure, a ranking of 192 countries puts Australia first and Canada second, with the US back in the 12th spot and the UK not even in the top 20. Ethiopia and Nepal ranked last. The most surprising upshot of the new analysis may be that man-made assets like machinery and infrastructure - which most countries view as the prime determinants of wealth - in fact only account for 20% or less of real wealth. The new system of measurement promises to create new incentives for nations to invest in and protect their human and natural resources, rather than exploiting them for a fast buck. Of the four types of capital - produced, natural, human, and social - social capital remains the hardest to measure in dollar terms. [a long overdue alternative to the Gross Domestic Product measure]

	Triple bottom line n. an expanded baseline for measuring performance, adding social and environmental dimensions to the traditional monetary yardstick
In Depth	Serageldin, Ismail Sustainability and the wealth of nations. Preliminary draft. Washington, DC: World Bank, 1995. 19 p.
	Not Hot - GDP
	GDP has long been the meat and potatoes measurement of the progress of nations. When we say an economy is "growing", we mean that GDP, or sometimes GN - for National - P, is on the rise, and that this is somehow a good thing. But cracks in the analytical foundation of the tally are starting to show, and journalists are joining academics in firing potshots at the tired indicator of economic health. Boston"s Atlantic Monthly led the attack in its October 1995 issue, charging that GDP is such a crazy mismeasure of the economy that it portrays disaster as a gain (see the Press Review). Similar complaints have long been levelled by academics, claiming that negative "externalities" of traditional economic growth - like pollution, job displacement and resource depletion - make GDP gains appear healthier than they really are.
*Virtual Ideas*	The Richest Country (http://www.delphi.com.au/dungeon/richest/home.htm)- a more in-depth look at Australia, the nation the world bank calls the planet's wealthiest

1. The Real Wealth of Nations

Not Hot - GDP