National wealth is the term used to describe a country’s net worth. It is calculated by adding together all of the wealth of the citizens, as well as all of the profits that a country earns through natural resources, trade and industry, and subtracting all of the debt obligations owed to foreign lenders. Assets that are held in foreign markets are also counted in a country’s national wealth calculations.
The level of national wealth achieved typically depends on several factors existing simultaneously. These include the overall educational level of a country’s citizens, the state of a country’s employment force, the natural resources a country produces and the products it exports to other countries for profit. The net wealth of countries that excel in all or most of these areas tends to be much higher than the national wealth of countries that suffer or lack several of these resources. Countries that excel in one area such as natural resources, but lack in other key areas, also do not tend to experience the same level of wealth as countries where all of these factors are apparent.
Some researchers theorize that among the most important indicators of national wealth is the educational level of a country’s citizens, as well as democracy and the access to quality health standards. Countries that excel in these primary areas tend to have a greater national net worth than that of countries where citizens struggle for access to these indicators. Wealth in the United States, in particular, is believed to have a direct correlation to these primary factors.
As most countries' national wealth can and does fluctuate, the general financial status of a country’s citizens may fluctuate, as well. An example of this is when affluence in the United States is high, the country’s overall net wealth is also healthy. When the American economy begins to suffer due to inflation, high unemployment and other factors, affluence among its citizens also declines since both are reciprocally linked.
By identifying a country’s national wealth, economists and politicians are able to plan, develop and organize a country’s sustainable growth. Similar to a budget used in business or for personal finance, knowing a country’s growth net wealth is helpful in determining how much money a country can afford to lend or borrow. Such also helps in determining how much credit or debt a country can comfortably afford to maintain at any given time.
