A country’s national wealth is the total wealth that it generates through economic activities. It is also the sum total of the wealth possessed by the people of a nation at any given time. This includes both tangible and foreign assets possessed by its citizens.
Accumulation of National Wealth
A country can accumulate national wealth through:
Natural resources: Natural resources include raw materials, land and water bodies, in their unmodified form. A country’s natural resources are extracted by various means and evolve into thriving industries such as mining, forestry, petroleum and fishing. Further, natural resources boost tourism, which contributes significantly to a country’s wealth.
Produced assets: Non-financial assets such as manufactured goods, inventories, agricultural products or other valuables are classified as produced assets. The export of these assets enhances a country’s wealth.
Human resources: A trained workforce, with vocational skills, helps to augment a country’s economic development. Experts in various fields such as science, education, commerce, medicine and technologies can take country to new economic heights. Shortage of technically trained or competent workforce can definitely inhibit a country’s overall progress and industrial development.
- Government policies: Domestic markets can be regulated to attract investments from domestic and foreign investors. Government policies can also aim to lure multinational corporations (MNCs) to invest in a country. This not only brings in considerable foreign investment but also creates job opportunities in the country.
Measurement of National Wealth
National wealth is measured by considering:
- the country’s gross domestic product (GDP)
- gross national product (GNP)
- network to network interface (NNI).
A country’s high per capita income, which is the average income of every citizen, denotes its prosperity. A country’s per capita income is generally measured in terms of commonly circulated currencies such as the Euro or the US dollar.
Measurement of national wealth is critical for a country’s policy makers and financial experts. They require accurate data and measurement of national wealth. This helps them to plan the country’s economic goals and to steer it in the right direction through economic analysis.