Natural capital

The World Bank study begins by defining natural capital as the sum of nonrenewable resources (including oil, natural gas, coal, and mineral resources), cropland, pastureland, forested areas, and protected areas. Produced capital is what many of us think of when we think of capital. It is the sum of machinery, equipment, and structures (including infrastructure) and urban land. The Bank then identifies intangible capital as the difference between total wealth and all produced and natural capital. Intangible capital encompasses raw labor; human capital, which includes the sum of the knowledge, skills, and know-how possessed by population; as well as the level of trust in a society and the quality of its formal and informal social institutions.

Once the analytical framework is set up, what the researchers at the World Bank find is fascinating. "The most striking aspect of the wealth estimates is the high values for intangible capital. Nearly 85 percent of the countries in our sample have an intangible capital share of total wealth greater than 50 percent," write the researchers. They further note that years of schooling and a rule-of-law index can account for 90 percent of the variation in intangible capital. In other words, the more highly educated a country's people are and the more honest and fair its legal system is, the wealthier it is.

...some countries are so badly run, that they actually have negative intangible capital. Through rampant corruption and failing school systems, Nigeria and the Republic of the Congo are destroying wealth and ensuring that they will be poorer in the future.

...90 percent of intangible capital is accounted for by years of schooling and the rule of law. On average, the rule of law explains 57 percent of countries' intangible capital while schooling accounts for 36 percent.

On the World Bank's rule-of-law index, the United States scores 92 out of a possible 100. The Swiss are even more law-abiding, achieving a score of 99 out of 100. .... By contrast, Nigeria's rule-of-law index score is a pitiful 4.8; Burundi's 4.3; and Ethiopia's 16.4. The OECD's average score is 90, while sub-Saharan Africa's is 28.

China's total wealth is 9,387. That correlates with its rule-of-law index ranking of 40.6. (On the rule-of-law index, Hong Kong ranks 90.3 and Taiwan ranks 77.8, but there's no listing for their total wealth.)