A new method of calculating wealth has resulted in the World Bank ranking Norway as the richest country in the world. The World Bank based its ranking on wealth per capita and thus beat out Qatar, which earlier held the top spot.
Instead of simply assessing wealth in terms of currency earned, though, the bank translated wealth into the various nations’ available resources both now and for the future. Norwegian Broadcasting (NRK) reported over the weekend that expected income for residents of the countries in the course of their lifetimes was also taken into the equation.
Qatar now ranks second on the list, with Switzerland third, followed by Luxembourg and Kuwait. The five poorest countries were listed as Gambia, Burundi, Mozambique, Guinea and the Comores, an island state off of southern Africa.
Ingvild Almås, an economics professor at business school NHH in Bergen and the University of Stockholm, called the World Bank’s new calculations “interesting,” but worries that Norway may score higher than it should. She also warns that Norway’s economic dependence on oil can lead to major swings, given how oil prices rise and fall and how oil resources can run empty.
The wealth of natural resources like oil is part of the calculation in determining countries’ wealth. Almås also noted how oil prices can affect Norwegians’ expected earnings in the future. That makes Norway’s relative wealth vulnerable.
“One reason that we score so high can be that (Norway’s) oil wealth is counted two times,” Almås told NRK, both as a resource and as a factor responsible for relatively high incomes. She also cautioned that “in other countries with a lots of oil, but where the resource is privately owned without such a high degree of taxation as in Norway, oil resources won’t influence personal income to such a degree.”
Oil prices, meanwhile have recovered to around the USD 70-per-barrel mark in recent days, but they can dive again and take with them many jobs. It’s worth noting, though, that the numbers used in the World Bank study are from 2014, when oil prices collapsed. Norway’s economy held up relatively well during the oil price shock and has been recovering for the past year.
The World Bank study points out sharp differences among countries in the world. Norway’s total wealth per capita was set at USD 1.67 million, for example, as opposed to just USD 5,208 per resident in Gambia.
To read the entire World Bank report, click here (external link to the World Bank).