I seem to recall reading about the following research regarding "national intangible wealth" (IIRC):

  1. For each country, compute the GDP.
  2. Convert the GDP to "total national capital" using an interest rate (e.g., assuming 5% interest, the total national capital of a country with GDP=\$5B will be \$100B), the same(?) interest for all countries.
  3. Subtract from the above total national capital all the tangible capital: industry, farms, infrastructure, education of the population - everything you can put a price tag on.
  4. The result is the "intangible national capital" - stable non-corrupt government, courts that enforce contracts, work ethics...

I tried to google things like "national intangible wealth" &c, but found nothing reminiscent of the above approach.

Could you please provide a reference? Criticism of the methodology?


The reference is World Bank (2006). You can see the detail of the methodology in Appendix 1, and their estimates of intangible wealth in Appendix 2.

There are other methodologies to measure intangible wealth (e.g. here and here). Alternatively, there are many ways to compute natural and physical capital, which will give different results to the one given by the WB, even if using the same formula to compute intangible capital. For example, see here. If you search in google or here things like "measuring capital stock", you get tons of hits too.

I think that because this is a relatively new research area, there is no "official" guideline about how to measure intangible wealth. Maybe in the future some sort of standard will be produces, pretty much like the standard for GDP came to be (which is still subject to criticism anyway).


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