Measuring Russia's wealth. Apurva Sanghi speaks in the "FinAnalysis.Meetups" project

On January 30, World Bank leading economist in Russia Apurva Sanghi presented the results of a two-year study of a comprehensive assessment of Russia's wealth at the event "FinAnalysis.Meetups", HSE Banking Institute.

As Mr. Sanghi noted, “Russian economy is never as good as you expect, but it is never as bad as it seems”. Despite the observed growth slowdowns in the first half of 2019, the monetary easing helped to restore the growth - 1.7% in the third quarter of 2019. In 2020 and 2021, the projected growth will be 1.6% and 1.8%, respectively. 

As a rule, economists and policymakers are obsessed with changes in the GDP indicators, which characterize only a country's income. While a country's wealth reflects economic potential of a country more clearly, that is whu Apurva Sanghi proposes to focus on stock measurements of a country instead of the GDP indicators.

By definition of the World Bank, a country's wealth is a country's stock value of:

• produced capital (buildings, machinery, equipment, infrastructure, urban land),
• human capital (the value of skills, experience and knowledge of all citizens),
• natural capital (cropland, pastureland, forests, watership services, renewables and non-renewables, oil, gas, diamonds, nickel, different types of minerals and fossil fuels),
• foreign capital (net value of oversees assets called by the country).

 

This is the first time when the World Bank measured wealth so precisely for Russia. Mr. Sanghi marked some surprising results:

• An average Russian citizen is 1.8 times wealthier today than in 2000. At the same time, that is only a quarter of an OECD resident wealth.
• Human capital (skills, experience and knowledge of all Russians) comprises the largest share of wealth in Russia, at 46%.  To calculate this percentage the World Bank used Discounted present value of future earnings. By comparison, in OECD human capital runs as high as 70%.
• The share of natural capital in Russia’s wealth is around 20%, in contrast OECD average is only 3%. 

Given the high share of human capital and the importance of natural capital in Russia's wealth, it is important to pursue a policy in the following areas: 

• to move to sustainable development of Human Capital;
• to provide more efficient Natural Capital management.

The top 3 skills that you need to be a successful economist 

Apurva Sangi also shared his experience of working at the World Bank with the participants of the event, spoke about his career path and what he was guided by to achieve outstanding results.

You need to have strong technical skills, you need to be the top of your game in terms of knowing your field. 

Communication skills are essential as you need to be able to talk to your counterparts such as Central Bank, Ministry of Finance and other institutions, to civil society via media. 

And last but not least, you posess passion for self-development in terms of using economics as the tool to make this world a better place.