“What is not measured is not managed” is one of the truisms of management science, and it points to a weakness in the indicators we use to gauge development progress. As this book demonstrates, natural resources account for over 20 percent of the wealth of developing nations. Yet indicators like the growth rate of gross domestic product (GDP), used by ministries of finance and development everywhere, do not account for the depletion of those natural resources.
Not only are natural resources an important share of national wealth, but the composition of natural wealth varies widely across developing countries and regions. Some countries are blessed with mineral and energy resources which can generate significant revenues for governments but which may also distort development by providing “easy money.” Some countries are rich in crop and pasture lands, which places a premium on protecting soil fertility and managing the water resources which underpin productive use of the land. Other countries have magnificent forests, as well as wild lands with abundant biodiversity, which can draw ecotourists to visit from all over the world. Without sound management, this natural patrimony is at risk.
This book is about development and measuring development progress. While precise definitions may vary, development is, at heart, a process of building wealth—the produced, natural, human, and institutional capital which is the source of income and wellbeing. A key finding is that it is intangible wealth— human and institutional capital—which dominates the wealth of all countries, rising as a share of the total as countries climb the development ladder. The accounting of wealth in over 100 countries over the decade from 1995 to 2005 points to the important progress that has been made in developing countries.
The first chapter of the book ends by suggesting that “how we measure development will drive how we do development.” We invite the reader to join us in an exciting endeavor—taking a truly comprehensive approach to development by building the wealth of nations.
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