Should Resource Rents Count as National Savings?
Wednesday, August 6th, 2008
David Smiley
All countries save about 25 percent of what they produce, their Gross Domestic Product or GDP, for investment as capital in future production. In national accounts these “savings” include environmental damage and natural resource depletion incurred in the process of production. This does not seem a very good measure of sustainable development, and the World Bank has come up with a better one. The Bank subtracted from Gross Domestic Savings, the cost of carbon dioxide damage, and the values of energy depletion, mineral depletion, and net forest depletions. The result of these subtractions the Bank called Genuine Domestic Saving, or GDS, and they are astonishing.
World average GDS was about 13 percent. Both World Bank regional and country data were tabulated in World Bank World Development Indicators report of 2001, pages 180-183. For East Asia and Pacific, a region dominated by the land reform countries of China and South Korea, GDS was 25 percent. Moving to areas of political turbulence, GDS for Sub Saharan Africa was 3.9 and for Middle east and North Africa minus 1.3 percent.
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