Inclusive wealth
Also called: Inclusive Wealth Index · Topic: National Income Accounting: GDP, GVA and Welfare · NCERT: Beyond NCERT
Meaning
Inclusive wealth is the total wealth of a nation. It has three parts:
Inclusive wealth = produced capital + human capital + natural capital
Produced capital means machines, buildings and roads. Human capital means people's skills and health. Natural capital means forests, minerals, water and similar resources. If inclusive wealth keeps rising over time, development is sustainable, meaning future generations are not made poorer. UNEP publishes it in its Inclusive Wealth Reports.
Example
A region cuts down its forests and sells the timber. Its GDP rises that year. But if the loss of natural capital is bigger than the gain in produced and human capital, inclusive wealth falls. The growth is then not sustainable.
Don't confuse with
- GDP: this is a flow, meaning output over a year. Inclusive wealth is a stock, meaning the assets a country holds at a point of time.
Related concepts
- GDP and welfare
- Non-monetary exchanges
- Green GDP
- System of Environmental-Economic Accounting
- Natural capital accounting
- Genuine Progress Indicator
- Beyond GDP