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Report Assesses Global Assets

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A new report reveals that in 2012, the United States had $39.7 trillion of the world’s $193 trillion in built asset wealth—buildings, infrastructure, machinery, and equipment. That places the United States at the top of a list of the 30 wealthiest nations in the world when measuring total built assets; but when viewed as built assets per capita, the United States ranks eighth. Wikimedia Commons/Diliff

A new report compares the largest nations by their built asset wealth, drawing an interesting picture of the changing global economy.

August 13, 2013—In 2012, the United States had $39.7 trillion of the world’s $193 trillion in built asset wealth—buildings, infrastructure, machinery, and equipment. That places the United States at the top of a list of the 30 wealthiest nations in the world. China—currently second on the list with $35.45 trillion—is projected to more than double its assets by 2022, assuming the top spot sometime in 2014.

A new report, “Global Built Asset Wealth Index 2013,” examines 30 countries that account for 82 percent of the global gross domestic product (GDP), comparing them by built assets to develop alternative views of the world economy. The report was prepared by EC Harris, a London firm that specializes in investment consulting in built assets. EC Harris is an ARCADIS company.

“While GDP quantifies national output, our analysis of the total stock of built assets provides an indication of accumulated wealth and the resources that can be drawn upon to fuel future economic growth. The analysis also paints a vivid picture of the extent of catch-up required in many emerging economies to build a substantial built asset base,” said Catherine Tobiasinsky, the national director of built asset consultancy for ARCADIS US.

“At $193 trillion, the total value of built assets surprised us—equivalent to three times [the] GDP. This is significant also, as these assets need to be maintained and in time, replaced, at a potentially huge cost,” said Tobiasinsky, in written comments to Civil Engineering online. “The enormous asset wealth of the U.S. came as no surprise, but the rate at which the U.S. could be overtaken by China is probably the most significant finding in the report.”

Emerging economies in the Middle East, Africa, and Asia are projected to grow the most rapidly in the next decade, increasing their built assets by 63 percent. This compares with a 2.7-percent growth projection for European countries, many of which are still hampered by difficult economic conditions in the aftermath of debt crises.

“That will have implications beyond the next 10 years,” the authors write. “Investment in built assets now lays the foundations for future GDP expansion and therefore impacts upon the potential for further investment in the years ahead.”

The authors used a logarithmic scale to illustrate the relationship between built assets and GDP, drawing some interesting comparisons. China, for example, although in the midst of an ambitious building program, is generating a higher level of GDP from its assets than the average. This suggests that the rapid pace of building has not yet reached a level that indicates overinvestment.

The United Kingdom also generates higher than average GDP from its built assets. The authors assert that this could reflect higher efficiency levels, but could also indicate a developed economy that is underinvesting in built assets.

“An analysis of GDP and built asset wealth suggests that a number of countries including Australia, Canada, France, and Italy do not generate as much GDP from their built asset base as others, including Brazil, Russia, and surprisingly the United Kingdom,” said Tobiasinsky. “In a world where resources are constrained, careful investment in infrastructure to deliver optimum economic and social outcomes will be key—particularly for emerging economies.”

Tobiasinsky noted that some of this indicated inefficiency is seen in such large countries as Canada and Australia that have a mix of dense urban areas and sprawling, lightly populated rural areas that must be served with infrastructure.

“However, whether justified or not, having an extensive built asset base requires maintenance and replacement that may prove burdensome in the future,” Tobiasinsky said. “Ironically, it is the ‘asset rich, cash poor’ nations of Western Europe that may face the greatest challenge—with a growing asset replacement burden coinciding with economic austerity.”

The authors also calculate each country’s levels of built assets per capita, and this creates a dramatic reshuffling of the list. The small island nation of Singapore leads the world with $156,000 of built assets per resident, followed by Japan, Australia, and Qatar, each with more than $140,000 of wealth per person. The United States is eighth on this list, with $126,000 of built assets per capita. China is 24th and India is 29th.

“Although China has the second largest built asset stock—worth around $37 trillion in 2012—its asset base per capita is lower than Thailand, Malaysia, or Mexico,” Tobiasinsky said. “This relative gap is also a major driver for catch-up growth.”

An analysis of the annual change in the value of built asset wealth shows that it declined on a per capita basis by 1.4 percent during 2012. This could indicate maintenance of built assets is underfunded.

“This is one of the more interesting findings from the initial study,” Tobiasinsky said. “We will be considering issues of repair and replacement in future studies.” Future studies will also examine wider issues of asset performance and its impact on wealth creation.

“In a world where the balance of economic power is shifting, we see countries in the East with large cash reserves investing in their built environment at an unprecedented rate, whereas countries in the West have an aging built environment, but little cash to update it,” Tobiasinsky said. “This will create a new set of challenges with regard to competition for expertise, finance, and resources to meet built asset needs.

“The trends for rapid investment in the cash-rich/asset-poor nations of Asia and the Middle East are part of a wider pattern of a transfer of production and demand away from developed nations,” Tobiasinsky explained. “This trend will strengthen as these countries evolve into consumption economies rather than investment economies—a transition that China has already commenced as part of its current five-year plan.”



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