PhD A.Jumayev - National net wealth, also known as national net worth, is the total sum of the value of a country's assets minus its liabilities. It refers to the total value of net wealth possessed by the residents of a state at a set point in time
- National wealth is equal to the sum of domestic tangible assets and the net foreign balance
- The concept therefore includes nonreproducible tangible assets, such as land and subsoil assets; reproducible fixed and movable tangible assets, such as buildings and other structures, machinery and equipment, vehicles, and consumer durables; inventories of monetary metals, raw materials, work in process and finished goods; and the excess of foreign assets over foreigners’ holdings of domestic claims, equities, and tangible assets.
There remain a few problems of whether to include or omit specific types of assets which are listed below. (1) Military assets. (2) Works of art and collectors’ items. (3) Natural resources. (4) Human resources (5) Rights, such as patents, copyrights, good will, and monopoly profits Methods of measuring national wealth - In practice, national wealth can hardly ever be measured on the basis of existing balance sheets of sectors or smaller groups of units because such documents are available only for part of the economy (often only for corporate business enterprises) and because they do not apply a consistent system of definition and valuation of wealth
- Exhaustive (item-by-item) enumeration and direct valuation (census method) is usually feasible only for a few components of national wealth, such as agricultural land and single-family houses, where it can be based on the declarations of owners or occupants. The census method is extremely expensive if applied to a large number of nonstandardized properties
- Sample evaluations, usually by engineering appraisal, of a limited number of properties of a given type may be blown up to the national total for the same item
- Property tax valuation is applied primarily to real estate. Since tax values commonly deviate from current values, an adjustment, usually based on a sample of properties, is required.
- Fire insurance values may be used if insured values are close to market values (or if the difference can be ascertained) and if the ratio of insured to uninsured properties is known.
- Perpetual inventory (replacement cost) estimates are based on the assumption that the market value of reproducible assets is equal to or close to their replacement cost. In this case the current value can be estimated by adjusting the original cost of classes of reproducible assets (reflected in past capital expenditures on them as given, say, in national income accounts) for changes in the cost of construction and the prices of equipment and for capital consumption.
- Personal property tax returns can be used in the few cases where individuals have had to file returns listing their assets in sufficient detail and at sufficiently uniform valuations to permit an estimation of the wealth of the entire personal sector
- Samples of personal balance sheets obtained from a relatively small number of households have become another source of estimation of the value of all or selected assets of the personal sector. This approach, made possible by the development of modern sampling and interview methods, has been widely used in the United States and Great Britain (Goldsmith 1955-1956; Lydall 1955).
- Capitalization of income can be used when the gross or net income of a specific type of wealth is known, say, from the national income accounts, and where a market rate of capitalization exists.
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