According to World Bank studies, Uruguay, Chile and Brazil are the countries with the highest per capita wealth in the region
The World Bank published a report that analyzes the wealth of different countries over two decades. In accordance to the report, the richest nations in South America are Uruguay, Chile and Brazil, and for the three countries most of their wealth comes from human capital.
How is wealth measured?
"The Changing Wealth of Nations 2018" is the most recent report of the World Bank, in which data on the wealth of 141 countries is analyzed from 1995 to 2014. The financial institution uses four components whose estimated values are added to measure wealth of each country. According to the definitions of the World Bank, the components are:
- Capital produced and urban land: machinery, buildings, equipment, and urban land, valued at market price.
- Natural capital: energy and minerals, agricultural lands, forests and protected areas.
- Human capital: the value of the skills, experience and effort of the active population throughout their lives.
- Net external assets: the sum of the external assets and liabilities of a country, such as foreign direct investment and reserve assets.
Adding these four and dividing the total by the number of inhabitants of a country or region, you get per capita wealth. That is, the amount of wealth that would correspond to each person if it were divided equally.
The World Bank argues that global wealth increased significantly, growing by 66% over the two decades observed. While total wealth has increased almost everywhere in the world, that is not the case with per capita wealth. For example, in some parts of Africa, rapid population growth has led to a reduction in wealth per person.
As reported by the international organism, human capital tends to be the most important component in many countries with considerable levels of wealth while natural capital represents a higher percentage in economies with medium or low incomes. In the case of Latin America, as already mentioned, the richest countries are Uruguay, Chile and Brazil. In all three cases, the composition of wealth follows the pattern of high-income nations.
With a per capita wealth of $ 254,601 USD, Uruguay is the richest country in the region. 67.3% of this value comes from human capital; 25.2% corresponds to capital produced; 8.6% belongs to natural capital; and a negative 1.2% corresponds to net financial assets abroad.
In the next position, in terms of wealth per capita, is Chile, with $ 237,713 USD. Of that value, 58.7% comes from human capital; 23.2% of natural capital; the capital produced constitutes 19%; and a negative 0.8% corresponds to net assets abroad.
The country with the largest population in the region ranks third with $ 188.88 USD per capita. The wealth of Brazil comes from 65.5% of human capital; 19.6% of natural capital; 17% of the capital produced, and net assets abroad that correspond to the remaining 2% negative.
The fourth place in the Southern Cone is occupied by Venezuela, a country that, despite the deep crisis it is going through, has an abundance of natural resources. Again, it is worth emphasizing that per capita wealth does not account for the distribution of wealth and therefore does not reflect inequality.
Finally, the fifth richest country in the region is Colombia, which, according to the World Bank, is also one of the global leaders in accounting for natural capital. In accordance to the information from this institution, Colombia is one of the first countries to have a unit in its statistics department (DANE) dedicated to calculate the value of forests, water, and minerals.
Latin American Post | Paula Bautista
Copy edited by Marcela Peñaloza