Unequal wealth of nations: Evidence from the World Bank wealth accounts

Cheng Li; Cheng Li

doi:10.3934/NAR.2024018

National Accounting Review

2024, Volume 6, Issue 3: 384-406. doi: 10.3934/NAR.2024018

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Research article

Unequal wealth of nations: Evidence from the World Bank wealth accounts

Cheng Li ^,

Institute of Economics, Chinese Academy of Social Sciences, Beijing 100836, P. R. China

Received: 15 April 2024 Revised: 27 August 2024 Accepted: 12 September 2024 Published: 18 September 2024
JEL Codes: D31, E21, F62

Using the World Bank's Changing Wealth of Nations database, this paper provides novel evidence on the cross-country inequality of wealth from 1995 to 2018. Overall, judging by both the top/middle/bottom shares and coefficients of variation, the analysis found that inequality in wealth per capita decreased prior to the 2008 global financial crisis and has remained stable since then. Adopting a before-after approach, this study further showed that different components of national wealth, including human capital, produced capital, natural capital, and net foreign assets, have heterogeneous impacts on between-country wealth inequality. In addition, we introduced a rank-based correlation analysis to explore wealth mobility across nations, revealing extremely low and decreasing mobility over time. Unlike most existing studies that exclude some major components of wealth, this study relied on a more comprehensive accounting of wealth and thus offers new insights into the dynamics of global per capita wealth inequality, the impact of the 2008 financial crisis, and the component-level contributions to wealth disparities. These findings have significant implications for understanding global challenges, including the North-South divide, climate change, and the distributive consequences of globalization.
- national wealth accounts,
- wealth distribution,
- wealth mobility,
- decomposition analysis
Citation: Cheng Li. Unequal wealth of nations: Evidence from the World Bank wealth accounts[J]. National Accounting Review, 2024, 6(3): 384-406. doi: 10.3934/NAR.2024018

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Abstract

Using the World Bank's Changing Wealth of Nations database, this paper provides novel evidence on the cross-country inequality of wealth from 1995 to 2018. Overall, judging by both the top/middle/bottom shares and coefficients of variation, the analysis found that inequality in wealth per capita decreased prior to the 2008 global financial crisis and has remained stable since then. Adopting a before-after approach, this study further showed that different components of national wealth, including human capital, produced capital, natural capital, and net foreign assets, have heterogeneous impacts on between-country wealth inequality. In addition, we introduced a rank-based correlation analysis to explore wealth mobility across nations, revealing extremely low and decreasing mobility over time. Unlike most existing studies that exclude some major components of wealth, this study relied on a more comprehensive accounting of wealth and thus offers new insights into the dynamics of global per capita wealth inequality, the impact of the 2008 financial crisis, and the component-level contributions to wealth disparities. These findings have significant implications for understanding global challenges, including the North-South divide, climate change, and the distributive consequences of globalization.

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