Describe the three components of a nation's wealth. What insights emerge from the World Bank's analysis of the wealth of different groups of nations?

Question

What will be an ideal response?

Answer 1

The three components of a nation's wealth are produced capital, natural capital, and intangible capital. Produced capital is the human-made buildings and structures, machinery and equipment, vehicles and ships, monetary savings and stocks, highways and power lines, and so forth that are essential to the production of economic goods and services. Natural capital refers to the goods and services supplied by natural ecosystems and the mineral resources in the ground. Intangible capital is divided into three elements. The first is human capital, which refers to the population and its physical, psychological, and cultural attributes. The second element, social capital, is the social and political environment that people create for themselves in a society. The third element is knowledge assets, which is the codified or written fund of knowledge that can be readily transferred to others across space and time.
If you refer to Table 2-1, you can see that although natural capital often ranks third in most countries, this does not mean that it is less important than human resources or produced assets. In particular natural capital plays a more important role in low-income countries, as they develop and become more dependent on their natural resources, than in wealthier countries.