6 THE CHANGING WEALTH OF NATIONS
have been slight gains by low- and middle-income countries. The world’s poorest countries, accounting for 10 percent of the global population, hold less than 1 percent of global wealth (table 1.1). Intangible wealth is the largest single component of wealth in all income groups, and the fastest growing one as well. Whether one compares wealth across different income groups for a single year or looks at a single income group over time, the comprehensive wealth accounts tell a clear story about the relationship between development and wealth: development entails building total wealth, but also changing the composition of wealth. Most countries start out with relatively high dependence on natural capital—agricultural land, subsoil assets, and/or forests. They use these assets to build more wealth, especially produced capital and intangible (human and institutional) capital. This relationship between development and capital is clearly seen in the lower-middle-income countries, where the economy of China dominates. As figure 1.1 shows, per capita wealth has increased dramatically, and just as important, the composition has changed markedly. The share of natural capital fell from 34 percent in 1995 to 25 percent in 2005 (although, as chapter 2 shows, the level of natural capital per person actually increased by nearly $1,100), while the shares of produced capital and intangible capital increased strongly. The rapid growth of intangible capital is due partly to increased educational attainment in most countries, but a significant part of the increase in intangible capital results from improvements in institutions, governance, and other factors that contribute to better, more efficient use of all of a country’s capital—produced, natural, and human. The study of China in chapter 6 shows that rapid economic change and the transition to a market-oriented economy offered people opportunities to realize much higher returns for a given level of educational attainment. Although wealth is dominated by intangible capital, in low-income countries natural capital constitutes a large share of comprehensive wealth, larger than produced capital. In upper-middle-income countries, natural capital is only slightly less than produced capital, 15 percent and 16 percent, respectively. The high dependence of low-income countries on natural capital and the important role of natural capital in building wealth suggest that it should receive close attention. For countries dependent on nonrenewable natural capital, transforming natural capital into other forms of wealth is the path to sustainable development. Where natural capital is potentially renewable, such as forest land, appropriate property rights and management regimes are essential if the country is to develop sustainably rather than deplete its natural capital, ending up poorer than before. Furthermore, natural capital warrants special focus in the wealth management of all countries, even those where its share in wealth is small, because of