Sustainable matrix beyond GDP: investment for inclusive growth

Abstract

Measuring a country’s sustainable development by its gross domestic product (GDP) is insufficient to capture the loss of capital that determines future human welfare. To address this, we propose the inclusive wealth index, which integrates biophysical quantities and monetary values of natural, human, and produced capital. We analyzed the level of Inclusive Wealth in 163 countries over the past 30 years to assess sustainable development goals (SDGs) going beyond GDP. Global wealth has suffered significant losses in natural capital, with the biased accumulation of capital assets leading to unsustainable and unequal development. In low-income countries, soaring population levels and biased capital investments exacerbate the depletion of natural capital. Our results underscore the critical role of natural capital and inclusive capital management in sustainable development. Policymakers can use this information to make capital investments in their economies and promote recovery from COVID-19 that aligns with the SDGs, the Paris Climate Agreement, and initiatives beyond GDP.