• Tuesday, June 25, 2019

Why Pakistan is wealthier than India

Discussion in 'Pakistan Economy' started by KhalaiMakhlooq, Dec 14, 2018.

  1. KhalaiMakhlooq

    KhalaiMakhlooq SENIOR MEMBER

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    [​IMG]
    ASSET CLASSES
    An ambitious project to measure the wealth of nations shows how GDP is a deceptive gauge of progress
    By Eshe Nelson & Dan Kopf

    January 31, 2018

    Is gross domestic product a sufficient measure of an economy’s health? Many argue that GDP, which counts the sum of the goods and services produced by a nation, fails to reflect a population’s wellbeing, because it accounts for neither distribution of income nor extractive effects such as pollution.

    This week, the World Bank published an ambitious project to measure economies by wealth, to get a more complete picture of a nation’s health, both in the present and the future. The Changing Wealth of Nations analyzes the wealth of 141 countries, from 1995 to 2014. The report argues that wealth is a better judge of economic success because it measures the flow of income that a country’s assets generate over time—although it is significantly more challenging to measure. “A country’s level of economic development is strongly related to the composition of its national wealth,” the report states.

    Wealth includes all assets, which means human capital (the value of earnings over a person’s lifetime), natural capital (energy, minerals, agricultural land), produced capital (machinery, buildings, urban land), and net foreign assets.

    Assessing an economy by GDP instead of wealth is like looking exclusively at a company’s income statements without considering the assets on its balance sheet. A company can make its income look good for a short time by liquidating assets, but over the long run this will reduce the firm’s productive capacity and other means of generating income in the future.

    The same applies to a country. GDP “does not reflect depreciation and depletion of assets, whether investment and accumulation of wealth are keeping pace with population growth, or whether the mix of assets is consistent with a country’s development goals,” the report states. That said, for most countries GDP is strongly correlated to wealth.

    [​IMG]
    However, there are outliers. For example, in Turkey, GDP outpaces wealth. Kuwait has much more wealth per capita than its GDP (as does Saudi Arabia, but to a lesser extent). Kuwait and Saudi Arabia have the resources to make investments far into future. Saudi Arabia is making these efforts, diversifying its economy away from oil under a plan known as Vision 2030.

    The push for wealth accounting also came up in the 1980s, the World Bank says. Back then, there were concerns that the rapid growth in GDP of resource-rich countries was mostly the result of liquidating natural capital—wealth accounts would have been a better measurement of an economy’s health at the time.

    In many rich countries, human capital tends to be the largest component of wealth, whereas natural capital is higher in low- and middle-income economies. Global wealth increased 66%, to $1,143 trillion, between 1995 to 2014. And while total wealth increased almost everywhere, per capita wealth did not. Some low-income economies experienced a decline because population growth outpaced investment, especially in parts of Africa. The share of global wealth held by low-income countries remained at about 1% throughout the period of study, even as their share of the world population increased from 6% to 8%.

    The table below shows the share of wealth that comes from different types of capital for the 10 most populous countries in the world. Human capital accounts for roughly two-thirds of global wealth.

    [​IMG]


    As global economies develop, the composition of wealth changes. In low- and middle-income countries, human capital wealth on a per-capita basis tends to increase, while aging populations and stagnant wage growth means that this component shrinks for richer countries. Still, in high-income countries human capital comprises some 70% of wealth, and natural capital only 3%.

    Simply having natural capital is not enough to ensure the economic development of lower-income countries, the World Bank says. Of the 24 countries classified low-income since 1995, 12 are resource rich, the organization says.

    Globally, another way to increase wealth is through gender equality. The World Bank finds that women account for less than 40% of human capital wealth because of their lower earnings, lower labor force participation, and fewer average hours of work. If the gender pay gap were closed, the world would experience a 18% increase in human capital wealth.

    ----- EDIT ------ (VIDEO ADDED)

     
    Last edited: Dec 14, 2018
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  2. KhalaiMakhlooq

    KhalaiMakhlooq SENIOR MEMBER

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    I had to post this because many people on this forum still quote GDP, and to be honest we stopped using that in the mid-20th century.
     
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  3. Baby Leone

    Baby Leone SENIOR MEMBER

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    but as per few illiterate indians (majority) indians are light years ahead of Pakistan :rofl::rofl::rofl:

    if you want to see real wealth just see the consumption pattern of these 3 countries Pakistan, Indian & Bangladesh and you will get shocking results.
     
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  4. Imran Khan

    Imran Khan PDF VETERAN

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    mery pass to 22000$ se ziada ki wealth hai bhai ye kya baat hoi 22000$ ka to ajkal 5 marly ka plot milta hai wo bhi city se bahir .
     
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  5. KhalaiMakhlooq

    KhalaiMakhlooq SENIOR MEMBER

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    Yes, the Indians I have met are intelligent, creative and ambitious people. Consumption has nothing to with being "ahead".
     
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  6. Darwin

    Darwin BANNED

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    Congrats......... To Nigeria.
    Nearly double as wealthy as us.
     
  7. Ghessan

    Ghessan FULL MEMBER

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    "human capital (the value of earnings over a person’s lifetime)"

    i think this kept Pakistan in top 10 and obviously most populous as ours most population is a young lot.
     
  8. Rajesh Kumar

    Rajesh Kumar BANNED

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    Because Indian population is almost thrice compare to Pakistan. Still, India is doing way better in many fields .... I will start from IT (Information Technology). and Pakistan is also doing better compare to India in many fields.

    And, both country is struggling with corrupted leaderships, Corrupted Babu's and Corrupted management systems.

    But Both are suffering from same Rape incidents, crime rate, toilet and health care issues........
     
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  9. KhalaiMakhlooq

    KhalaiMakhlooq SENIOR MEMBER

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    India's 1.33 Billion vs Pakistan's 197 Million would be 6-7x larger
     
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  10. Ghessan

    Ghessan FULL MEMBER

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    you are absolutely right just watch the next post to yours.
     
  11. KhalaiMakhlooq

    KhalaiMakhlooq SENIOR MEMBER

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    Watch the next post of yours? Well here it is.
     
  12. Ghessan

    Ghessan FULL MEMBER

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    you did not pick what i was saying
     
  13. Baby Leone

    Baby Leone SENIOR MEMBER

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    but it has to do with wealth.
     
  14. Rajesh Kumar

    Rajesh Kumar BANNED

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    Yup.... More population, more challenges ... if your family member is only 2 than you will able to provide better education, food and wealth ...etc....... Same case, if you have 12 members than definitely It will be more challenging... Right?
     
  15. KhalaiMakhlooq

    KhalaiMakhlooq SENIOR MEMBER

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    As someone who's travelled to many many places all the world, and interacts with people from ALL nationalities on a daily basis, I think you can understand what I mean when I say, the people I meet are intelligent, creative and ambitious.

    How many times have you set foot outside of your country, sir?