ABSTRACT
This study extends the current measures of sustainability using inclusive wealth by capturing total factor productivity (TFP) that takes natural capital and other conventional inputs into consideration. As for the inclusive wealth adjustment, we utilized the Malmquist Productivity Index to measure the cross-country productivity during the 1990–2010 study period for 140 countries. We found that incorporating TFP with natural capital has a significant impact on inclusive wealth as the sustainability measure. Natural capital, including oil capital gain related to the change in oil prices, also has a significant role in the productivity value of a country. In several countries, the decline in natural capital is not high enough to compensate for both human and produced capital. This finding enhances our understanding on how inclusive wealth adjusted by TFP can be considered an economic policy evaluation and planning tool for countries’ sustainability.
