DEVELOPMENT

Basing the total and net savings related to produced
capital on the gross national income, means that only
the domestic savings have been taken into account, and
the foreign savings have been left out. In Estonia, for
example, during the period of rapid economic growth
from 2001 to 2008, the total capital investment in fixed
assets was about 30% of GDP, two-thirds of which was
covered by domestic savings and one-third by foreign
savings. The latter was utilised through foreign investments.
Only the investments that were based on domestic
savings were taken into account as increasing the
state’s capital reserve. This approach promotes the following
train of thought -- the capital of the population
in the given state is only increased by the investments
that are made from local savings (i.e. the proprietary
income goes to the citizens of the state to whom the
investments money belongs). The foreign investments
based on foreign savings earn proprietary income for the
foreigners. Only the portion of the capital reserve based
on domestic savings, which exceeded depreciation, was
increased by the investments. In addition to the savings
that were realised as produced capital, education expenditures
also increased genuine savings. The net savings
related to natural capital are based on the depletion of
natural capital and the emissions of various dangerous
substances, and are negative in all the states under
observation. Based on the relationship stipulated in the
introduction, according to which, the value of capital
is equal to the income flow that it creates in the future,
and present net savings are equal to the future changes
in well-being, it can be concluded that, in order preserve
well-being at the same level at least, the negative net
savings related to pollution and the depletion of sub-soil
resources should be covered by the positive net savings
from produced and human capital.
When assessing the 2008 indicators for the genuine
saving of various states, the basic reference points should
be taken into consideration. Generally, the net investments
(capital gains) in rich countries are smaller, since
most of their production is capital-intensive, and a large
portion of the investments are used to replace existing
capital (Table 4.2.3). In the set of reference states, a state
like this is the Netherlands, where the savings related to
produced and human capital are only 1.2% of the operating
net national income, and adding the negative savings
related to natural capital also results in negative genuine
savings (Figure 4.2.2).
Ireland, Hungary, Uruguay and Lithuania also have
relatively low savings rates (less than 10%) related to
produced and human capital. The corresponding indicator
in Estonia was 11.2%, and this puts Estonia sixth
from the bottom, in this group of states. Singapore and
South Korea, which represent the Asian market economy
model in the set of states, stood out for their high savings
rates. In regard to natural capital, the states where the
mining of minerals was important, primarily Chile and
Canada, stood out for their large negative savings rate
(Table 4.2.4).
In this group of states, Estonia was ranked fifth,
based on the size of the negative savings related to natural
capital, and was the state where the largest contribution
to this indicator was made by carbon emissions.
Table 4.2.4
Percentage of national income related to natural capital
in 2008 (%)
State
Energy depletion
Mineral depletion
Source: The Changing Wealth of Nations. Measuring Sustainable
Development in the New Millennium 2011. 186–195.
Singapore and South Korea are differentiated by their
high genuine savings rate (over 20%). Another group
is comprised of the states in which the corresponding
indicator is between 10% and 20%, and this includes
seven out of the 17 states in the set. Estonia is among
the next six states, which have indicators that are under
10%, but are still positive. Negative genuine savings
rates can be found in the Netherlands (primarily due to
the great need for replacement capital) and Chile (due
to the great impact of the mining of mineral resources
on the economy).
Examining some of the savings indicators based on
partially available data (Figure 4.2.3), we see that that
the basic proportions continue in 2010. Singapore, South
Korea, and, here, also Switzerland, are the states with the
highest net savings, while the only state with negative
savings is Israel. Estonia’s net savings have risen above
10%, and along with the calculation of education expenditures,
Estonia’s growth potential has even increased to
fourth place among the reference states. However, this last
indicator does not take into account the use (depletion) of
natural capital, and measures growth potential based only
on produced and human capital.
Although the points of reference for the states differ,
some generalisations can be made. The capital-intensive
production, in the states with high standards of living,
Net forest depletion
CO 2
damage
Hazardous
Total savings related
to natural capital
Austria -0.2 … … -0.1 -0.1 -0.4
Estonia -1.5 0 0 -0.7 0 -2.2
Netherlands -2.0 0 0 -0.2 -0.2 -2.4
Ireland … … 0 -0.1 0 -0.1
Israel -0.2 -0.3 0 -0.3 -0.1 -0.9
Canada -5.5 -0.6 0 -0.3 -0.1 -6.1
South Korea … … 0 -0.4 -0.3 -0.7
Lithuania -0.1 0 -0.1 -0.3 -0.1 -0.6
Latvia 0 0 -0.2 -0.2 … -0.4
Singapore 0 0 0 -0.3 -0.6 -0.9
Slovenia -0.1 0 -0.2 -0.2 -0.1 -0.6
Finland 0 -0.1 0 -0.2 … -0.3
Denmark -3.0 0 … -0.1 … -3.3
Czech Republic -0.7 0 … -0.5 … -1.2
Chile -0.3 -14.3 0 -0.3 -0.4 -15.3
Hungary -0.8 … 0 -0.3 -1.1
Uruguay 0 0 -0.4 -0.2 -1.1 -1.7
Estonian Human Development Report 2012/2013
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