Capitalization of National Wealth: Key Challenges and Development Opportunities

The provision of public finances of the state, as well as the increase in their efficiency and scale, the growth of the population's well-being, and the development of the national economy depend on a number of factors and prerequisites. These factors, both in the present and in the long term, predetermine the main strategic directions of socio-economic progress. To ensure the comprehensive development of society and the strengthening of the country, it is necessary not only to achieve an adequate level of consumption but also to ensure a sufficient norm of accumulation, which serves as the basis for further development and expanded reproduction. If this natural course of reproduction is not ensured, society loses guarantees of further development, which may result in the undermining of the country’s security and the failure of the state’s economic policy. In other words, it is essential to have certain financial, material-technical, labor resources, and natural reserves from the perspective of future development, which can ensure further socio-economic progress. Thus, the formation and multiplication of the country's national wealth acquire not only economic but also political significance and importance. The state and process of economic progress and expanded reproduction are characterized by several macroeconomic aggregate indicators. Among these, the calculation of gross domestic product (GDP) (with its various modifications, such as the volume, growth rate, GDP per capita, etc.), national income, gross national income, and other macroeconomic indicators with their various modifications is particularly emphasized. However, the main shortcoming of these indicators is that they essentially represent the current state of a country’s development without reflecting its potential and capacity for socio-economic development. This key gap is addressed by the indicator of national wealth. Currently, the unified methodological guidelines of the World Bank are widely used for defining and calculating national wealth. National wealth constitutes an integral part of the System of National Accounts (SNA). The SNA serves as a foundation for calculating economic growth by governments, the private sector, international organizations, and other stakeholders. National income and well-being are based on the assets or wealth of a country, calculated based on various criteria. National wealth includes the following four components: produced capital, natural capital (resources), human capital, and net foreign assets. It follows that the primary source of increasing a country's national wealth is the growth of gross domestic product. One of the methods for calculating the magnitude of gross domestic product (GDP), as the main macroeconomic indicator for assessing the country’s economic potential (strength), is the expenditure approach. The article discusses the relationships of distribution and redistribution of national wealth and their impact on the formation of incomes of different population groups.