Inclusive Wealth Research Articles

Unlocking the potential: How does technological innovation shape inclusive wealth? Empirical insights from top seven emerging economies

Amidst the pursuit of sustainable development and economic prosperity, there has been growing criticism directed towards traditional metrics such as GDP because of their narrow focus on societal well-being and environmental considerations. Therefore, our study shifts its focus from GDP to a more comprehensive measure of wealth, known as inclusive wealth. Our objective is to investigate how technology contributes to the advancement of inclusive wealth encompassing produced, natural, and human capital. We centred our analysis on the top seven emerging economies (E−7) and utilized data from the period of 1998–2022. Employing Fully Modified Least Squares (FMOLS), we develop four distinct models to examine the impact of technology on its various components and overall inclusive wealth. We also checked the robustness of our results by employing Cross-Sectionally Augmented Autoregressive Distributed Lag (CS-ARDL) model. Our findings reveal that technological advancement has a positive effect on each component of inclusive wealth, including produced capital, human capital and natural capital. Additionally, our results indicate a favourable impact of technological progress on overall inclusive wealth. These results emphasize the importance of incorporating technology into strategies for sustainable development and inclusive wealth.

The ocean carbon sink enhances countries’ inclusive wealth and reduces the cost of national climate policies

Improving our understanding of future ocean carbon uptake requires a nuanced understanding of the value of the annual ocean sink. Here, we combine an abatement cost-based approach and a climate damage-based approach to assess the value of the annual ocean sink. The former shows that the aggregate cost of national climate policies could increase by up to USD 80 billion if the ocean carbon sink weakens by 10 percent. As a complementary perspective, the damage-based approach shows that the annual ocean carbon sink contributes between USD 300 billion and USD 2,332 billion to countries’ inclusive wealth. Despite the conceptual appeal of the damage-based approach for its potential insights into regional wealth redistribution, uncertainties in national social cost of carbon estimates make it less reliable than the abatement cost-based approach, which in turn provides more reliable estimates for a fiscal cost assessment of improved monitoring services of the ocean carbon sink.

Assessing U.S. County Sustainability: Accounting for Heterogeneous Human Capital Flows and Health Quality Within the Inclusive Wealth Framework

Assessing U.S. County Sustainability: Accounting for Heterogeneous Human Capital Flows and Health Quality Within the Inclusive Wealth Framework

Education for flourishing: A social contract for foundational competencies

This essay is a commentary on Curren et al., ‘Finding consensus on well-being in education’. It acknowledges a growing international consensus that presents educational systems need to change and argues the case for consensus on flourishing as the overall purpose of education can be strengthened by drawing on economists’ work on well-being with respect to the inclusive wealth of nations. It emphasizes the need for tangible and measurable indicators that educators can use when implementing Curren et al.’s recommendations and outlines the International Science and Evidence based Education assessment’s suggestion of a ‘whole brain’ approach to education for flourishing.

Assessing the impact of natural capital and innovation on sustainable development in developing countries

Natural capital is a central consideration for developing informed policies for economic growth and sustainable development; however, the proportion of human capital, natural capital, and produced capital in inclusive wealth has been rapidly evolving. These forms of capital may have varying impact on sustainable development compared with aggregate inclusive wealth. This study uses panel data from 53 developing countries covering 2011 to 2022 to analyze how human, natural, and produced capital impact sustainable development, including associated innovation. We apply multiple econometric algorithms for empirical analysis, including Bayesian linear regression, Bayesian truncated regression, and a frequentist approach. The results reveal that human capital, innovation, green energy, political stability, and the absence of violence positively impact countries’ sustainable development. In contrast, natural and produced capital negatively impact sustainable development. The findings indicate that additional investment in human capital and innovation, green energy adoption, natural resource conservation, and modernizing produced capital will advance sustainable development in developing countries.

The Rise of Fintech: A Performance Analysis of Retail Mobile Stock Trading Platforms in India

The financial landscape in India is undergoing a significant transformation propelled by the rise of fintech solutions, notably mobile stock trading apps. These platforms have revolutionized the investment sector by eliminating traditional barriers and providing users with real-time market data, streamlined trading processes, and cost-effective brokerage services. The widespread adoption of mobile trading apps has resulted in a substantial surge in demat accounts and trading volumes, enhancing market liquidity and accessibility for a broader demographic. However, this rapid expansion underscores the importance of implementing robust regulatory measures to protect investors and uphold market integrity. As the fintech industry continues to evolve, it is imperative for stakeholders to prioritize financial literacy initiatives, responsible investing practices, and technological advancements to sustain growth and promote inclusive wealth creation. By leveraging innovative technologies and fostering a culture of informed investing, mobile trading apps have the potential to drive financial inclusion and empower individuals across diverse socioeconomic backgrounds to participate actively in the financial markets. Keywords: fintech, mobile trading apps, financial inclusion, regulatory measures, market integrity

Sustainable matrix beyond GDP: investment for inclusive growth

Measuring a country’s sustainable development by its gross domestic product (GDP) is insufficient to capture the loss of capital that determines future human welfare. To address this, we propose the inclusive wealth index, which integrates biophysical quantities and monetary values of natural, human, and produced capital. We analyzed the level of Inclusive Wealth in 163 countries over the past 30 years to assess sustainable development goals (SDGs) going beyond GDP. Global wealth has suffered significant losses in natural capital, with the biased accumulation of capital assets leading to unsustainable and unequal development. In low-income countries, soaring population levels and biased capital investments exacerbate the depletion of natural capital. Our results underscore the critical role of natural capital and inclusive capital management in sustainable development. Policymakers can use this information to make capital investments in their economies and promote recovery from COVID-19 that aligns with the SDGs, the Paris Climate Agreement, and initiatives beyond GDP.

Forest carbon removal potential and sustainable development in Japan

Forests play a crucial role in mitigating climate change and reducing emissions as a major carbon sink. However, its value in removing carbon dioxide (CO2) from the atmosphere is always underestimated in natural capital (NC) accounting and sustainability assessments. This study predicted Japan’s forest CO2 removal by afforestation and forest management and its monetary value until 2042 from national to gridded level, with statistical data and complementary satellite data products, and explored how that CO2 removal will contribute to sustainable development under the inclusive wealth (IW) framework. The results show that: (1) the annual CO2 removal by forests has the potential to offset 15.3% of the emission and increase NC by 6.8% in Japan, significantly contributing to carbon neutrality and IW growth; (2) the total CO2 removal in exiting forests will peak at around 2030 and then decrease, but expanding afforestation could offset that decrease in later years; (3) the spatial distribution patterns of IW and forest CO2 removal are opposite. This indicates a national carbon trading market could create new wealth for rural communities where vast forests exist, and then effectively balance the inequal urban–rural development in Japan. The explicit spatial information of this study could provide valuable information for differentiating policy priorities of forestry planning and sustainable development in different local communities.

Why Cross-Country Convergence of Income is Unsustainable: Evidence from Inclusive Wealth in 140 Countries

Recent economic convergence studies show that cross-country income inequalities have declined since the 1990s. However, this study finds that this episode of income convergence is unsustainable in the long run because countries' capacity to earn income diverges. Specifically, the paper analyses the convergence of per-capita Inclusive Wealth, which comprises all capital assets that contribute to the production of goods and services and the well-being of its society. Utilizing a diverse array of techniques to estimate convergence in a sample of 140 countries between 1990 and 2010, the paper demonstrates the simultaneity of unconditional convergence of GDP and unconditional divergence of Inclusive Wealth. Natural-resource-rich countries that lack human capital, in particular, appear unable to match the global per capita Inclusive Wealth growth rate. A trend emerges towards a bimodal Inclusive Wealth distribution with a substantial low-wealth peak. Thus, although swift income convergence appears promising for developing nations, I caution against optimism. When considering a more appropriate measure of future well-being, such as Inclusive Wealth, the economic outlook for many countries is bleaker than recent studies suggest.

Inclusive wealth footprint for cities in Japan: regional clusters for sustainable development

Inclusive wealth footprint for cities in Japan: regional clusters for sustainable development

Coal resource-based cities at the crossroads: Towards a sustainable urban future

Coal resource-based cities (CRBCs) represent a significant portion of resource-based cities in China, accounting for 40 % of prefecture-level cities. However, existing research on CRBCs primarily focuses on outcome-based sustainability analysis, neglecting production-based evaluation. To bridge this gap, our study investigates sustainability of CRBC using the inclusive wealth index (IWI), IWI per capita, and IWI density. We find substantial variations in CRBCs' inclusive wealth influenced by regional distribution and life stages. Regionally, sustainable development capacity follows the sequence “east > west > central > northeast”, with the northern region benefiting from abundant non-renewable natural capital. In terms of life stage sustainable development, the sequence is “growing > regenerative > grown-up > recessionary”. The decline in wealth performance from growing to recessionary types confirms the negative impact of the “resource curse” phenomenon, where resource dependence hampers growth. However, the regenerative type demonstrates the potential for transformation through sustainable development strategies. Our study presents practical strategies to enhance regional policies by adopting the IWI accounting indicator system proposed by the United Nations Environment Programme and localizing it to align with the characteristics of CRBCs in China. This innovative approach facilitates the evaluation of CRBCs' sustainable development performance.

Exploring the nexus between competition and the sustainable development goals in OECD countries

AbstractIn recent years, the OECD has been embroiled in discussions on the role of competition law in achieving the sustainable development goals (SDGs). However, it is crucial to understand whether the SDGs and competition work in harmony or are at odds before devising the best strategies for tackling sustainability challenges in competition laws and policies. For this purpose, this paper aims to empirically explore the interplay between sustainability and competition to fill the gap between economic theory and observed data through a study of a panel of 18 OECD countries from 2000 to 2019. The non‐declining inclusive wealth approach serves as the foundation for our model to evaluate sustainability. The SDG Index, which incorporates the socio‐economic and environmental aspects of sustainability, is used as a gauge of the SDGs' achievement, while the Index of Economic Freedom is used as a proxy for competition. The results of the feasible generalized least squares and panel‐corrected standard errors (PCSE) methods reveal that competition has no effect on the SDGs. Our empirical findings also show that the achievement of the SDGs is positively impacted by per capita gross national income and negatively impacted by population growth. The PCSE method's results indicate that the SDGs are not significantly affected by natural capital depletion, as measured by natural resource rents. Besides, the panel causality analysis confirms the existence of a causal relationship between the SDGs and competition. Our empirical results have two implications. First, they show that competition laws are still far from being an effective tool capable of achieving the SDGs. Second, they drive the competition authorities of OECD countries to devote greater efforts to sustainability‐related issues in the enforcement of competition law.

Economic factors underlying biodiversity loss.

Contemporary economic thinking does not acknowledge that the human economy is embedded in Nature; it instead treats humanity as a customer that draws on Nature. In this paper, we present a grammar for economic reasoning that is not built on that error. The grammar is based on a comparison between our demand for Nature's maintenance and regulating services and her ability to supply them on a sustainable basis. The comparison is then used to show that for measuring economic well-being, national statistical offices should estimate an inclusive measure of their economies' wealth and its distribution, not GDP and its distribution. The concept of 'inclusive wealth' is then used to identify policy instruments that ought to be used to manage such global public goods as the open seas and tropical rainforests. Trade liberalization without heed paid to the fate of local ecosystems from which primary products are drawn and exported by developing countries leads to a transfer of inclusive wealth from there to rich importing countries. Humanity's embeddedness in Nature has far-reaching implications for the way we should view human activities-in households, communities, nations and the world. This article is part of the theme issue 'Detecting and attributing the causes of biodiversity change: needs, gaps and solutions'.

The sustainability of Jatropha biodiesel production in Southwest China

Biodiesel is an ideal alternative to fossil fuels. To ensure sustainable development, the Chinese government and relevant market entities have conducted in-depth research and production practices on Jatropha biodiesel Southwest China for over a decade. However, few integrated and dynamic assessments of the sustainability of biodiesel projects have been conducted. Therefore, in this study, we constructed an integrated sustainability evaluation system (ISES) for Jatropha biodiesel projects, that applies the inclusive wealth (IW) and system dynamics (SD) modeling approach to analyze the integrated sustainability of Jatropha biodiesel projects. The results showed that: (1) the launch of the Jatropha biofuel project increased the IW by 826 million yuan; (2) the inclusive investment that represents the sustainability trends of the project was commonly positive, and the IW at the end of the project accumulated to about 29 billion yuan; and (3) the sensitivity analysis showed that the stable unit output and biodiesel output rate have a sensitive positive effect on inclusive investment. Finally, policy recommendations to promote the sustainable development of biodiesel production are proposed.

Subnational administrative capabilities shape sustainable development in Africa

Rapid population and economic growth in Africa are raising concerns over the sustainability of its economic development. Current research has assessed the sustainability of African development at the national level but has neglected subnational sustainability disparities driven by evidence of inequalities in investment rates and resource exploitation within various countries. Thus, this study uses the inclusive wealth (IW) accounting framework to assess the sustainability performance of 716 subnational African provinces. This framework consists of valuing the components of IW per capita (IWpc), namely, natural, manufactured, and human capital, between 2012 and 2018. Estimates reveal that provincial IWpc in this period grew by 1% per year on average. This growth is embodied by investment in human and produced capital, which offsets natural capital depletion. Although half of the provinces studied experience synergies between income and wealth growth, there are tradeoffs between these variables, indicating challenges in joining short- and long-term development. These tradeoffs are caused by inabilities to associate income and natural capital growth. Furthermore, although spatial inequalities in wealth levels, variations, and compositions are strongly defined by national boundaries, they are partially defined by the locations of capital cities within countries. Overall, the results show the potential for planning subnational need-based interventions to create sustainable development, the benefits of which extend nationally.

Assessing the United Nations sustainable development goals from the inclusive wealth perspective

The statement of sustainability in the sustainable development goals (SDGs) framework needs to be supplemented by a formal proof that intergenerational well-being also improves. This is the first study that aims to provide empirical evidence that links the progress of the SDGs and the changes in well-being, which are proxied by the SDG Index and the Inclusive Wealth (IW) Index, respectively. We propose an SDGs-wealth model which was analyzed using a machine learning method involving a balanced panel of 147 countries for 2000–2019. We find a strong correlation between wealth and the SDGs, with Goals 12, 13, and 7 being the most significant predictors of wealth. In contrast to Goals 12 and 13, we find a positive correlation between Goal 7 and the per capita IW Index, suggesting that promoting affordable and clean energy is beneficial for wealth accumulation. Quite the opposite, fostering responsible consumption and production and climate actions might be detrimental to wealth. We also find an alarming result for 50 countries in our study since they have deviated from the sustainable development trajectories either in the short or long run. Our study suggests that to achieve sustainable development, instead of focusing on the complex interactions among the SDGs, policymakers should put a stronger focus on improving IW.

Inclusive Wealth, Trade, and COVID-19

Inclusive Wealth, Trade, and COVID-19

Improving the Definition of the Category «Investment» in the Context of Sustainable Development

The article examines contradictory aspects related to the definition of the category «investment» in academic literature and legal acts. The main characteristics of investment and investment policy such as subject, object, essence of action and goals are revealed. The indicators of net investment of Belarusian organizations in current and constant prices are calculated. Original definitions of the categories «investment» and «investment policy» are developed, taking into account the concept of inclusive wealth and sustainable development of countries, regions and the world.

Sustainable Development Pathways for Chinese Cities: An Assessment of the Advanced Inclusive Wealth Index

AbstractThe inclusive wealth index (IWI) is a stock metric proposed internationally in recent years to measure a region's sustainable development potential. To explore sustainability more comprehensively in this context, this paper improves the inclusive wealth (IW) system proposed by the United Nations Environment Programme by extending the definition of intangible capital and refining the classification of different types of capital. We then used the advanced IWI to investigate the changes in per capita IW and its capital composition in China's 10 National Sustainable Development Agenda Innovation Demonstration Zones from 2010 to 2019, and proposed sustainable development pathways for Chinese cities. Our results underline the fact that IW and capital structure across different types of cities is highly variable. The growth of IW per capita in Shenzhen, an international metropolis, mainly depends on advanced produced capital and intangible capital. For Ordos, however—a resource‐rich “energy city”—the per capita IW is driven by ordinary produced capital and restricted by non‐renewable natural capital, thus showing a low level of sustainability. Through its consideration of four kinds of capital, this study also points out the inequality of human capital between urban‐rural and male‐female groups, and demonstrates how increasing educational attainment helps to promote the transfer of human capital between regions and sectors. In general, a strong potential for sustainable development is linked to the promotion of highly educated human capital, advanced produced capital and intangible capital, while the ecosystem service value of natural capital is also key.

Driving with Eyes on the Rear-View Mirror—Why Weak Sustainability Is Not Enough

Weak sustainability, WS, attempts a comprehensive notion of sustainability, sustaining human welfare directly, or equivalently, sustaining inclusive wealth, IW, sufficient to sustain welfare. Sustainability is, in principle, forever, and accordingly, IW is conceived and assessed in a very long-term context. Given that future outcomes are unobservable, IW assessments are conducted in terms of expectations. However, this introduces pervasive circular reasoning: the calculated value of IW assumes that our expectations will be met, but that is the question. Optimistic expectations (for example) increase calculated IW, which, in turn, increases our confidence that our society is on a sustainable path. Given the logical difficulties of projecting IW into the future, analysts resort to tracking IW at regular intervals through the recent past. This reduces, but does not eliminate, the circularity problem. The signals from tracking IW are less than perfect from a policy perspective: they are too aggregate, perhaps masking impending crises regarding particular resources until it is too late; and too dependent on imperfect markets; and they document the recent past, so policy managers are always playing catch-up. WS-based sustainability policy frameworks include WS-plus, which invokes ad hoc strong sustainability, SS, patches to address threatened resource crises. It may also be possible to allow a degree of WS flexibility for individual jurisdictions within the constraints of a global safe operating space, SOS.