Towards a Global Balance Sheet

I compiled various estimates of entries in the expanded KM framework towards a global balance sheet.

Negative side (see diagram below):

• Annual cost of corruption = $1 trillion in 2001-2002 according to the World Bank Institute, when GWP = $30 trillion. Now that GWP is 62 trillion, this estimate may be approximately $2 trillion.
• Losses from the global financial crisis had been reported in my previous blog post: $8.3 trillion in Wall Street and $50 trillion worldwide according to the Asian Development Bank
• US federal obligations by end-2008 = $65.5 trillion according to Shadow Government Statistics
• Losses from global climate change = 5-20% of GWP (or at least $3 trillion in 2008) according to a study by the Government Economic Service, U.K. headed by Sir Nicholas Stern
• Annual forest loss = $2-5 trillion according to an EU-commissioned study The Economics of Ecosystems and Biodiversity; the losses from other forms of natural capital are currently being estimated.
• Depletion of oil in Gulf countries up to 2020 = Gulf countries’ cumulative oil earnings up to 2020 = $4.7 trillion according to Ernst & Young
• About $2 trillion worth of minerals are extracted yearly, according to Dr. Philip Brown of the University of Wisconsin
• My estimate of annual cost of risk from global nuclear war = $591 billion per year, or NPV of $11.8 trillion (see my previous blog post)

Positive side (see diagram below):

• US GDP in 2008 = $14.33 trillion according to CIA World Factbook
• China’s GDP in 2008 = $4.4216 trillion, according to its National Bureau of Statistics and China’s forex reserves by end-2008 = $2 trillion according to Christopher Barker
• GWP in 2008 = $62.25 trillion according to the CIA World Factbook
• Human and social capital in US in 2006 = $153 trillion according to Dr. Gary Becker and Kevin Murphy of the University of Chicago. If this is growing at 2.14% per year, then it would be about $163 trillion in 2009.
• Gulf countries’ cumulative oil earnings up to 2020 = $4.7 trillion according to Ernst & Young
• My estimate of global knowledge assets = $871.5 trillion. According to the World Bank’s World Development Report 2009, 69% of GWP is from services which is knowledge-intensive, while 28% is from industry which is technology-intensive. In the US, human and social capital constitute 74% of total assets, while the remaining 26% is financial assets. If we assume that 70% of GWP is contributed by knowledge assets over the next decades, the NPV is $871.5 trillion at 5% discount rate.

What do we notice?

• Total US federal debt exceeds the wealth (GWP) created by the world economy in one year.
• The world is drawing from its natural capital at an annual rate about equal to the 2008 Wall Street meltdown.
• Knowledge is our biggest and growing asset for creating wealth.

–

(Note that there are embedded links in this blog post. They show up as colored text. While pressing “Ctrl” click on any link to create a new tab to reach the websites pointed to.)

=>Back to main page of Apin Talisayon’s Weblog
=>Jump to Clickable Master Index

Tags: China GDP, climate change, corruption, depletion of natural resources, forest loss, global balance sheet, global financial crisis, global losses, global nuclear war, Gross World Product, GWP, human capital, intellectual capital, knowledge, knowledge assets, knowledge management, natural capital, oil depletion, relationship capital, social capital, structural capital, tangible assets, US federal debt, US GDP