Income from built assets makes up 40% of GDP

By Chris Sleight07 May 2014

Income from built assets totalled US$ 27.1 trillion, or about 40% of GDP in 30 major economies according to a study by consultant Arcadis. The profit from built assets is defined as the residual income once profit associated with wages and other factors are removed. This covers profit for owners, funders, operators and constructors, as well as users, who gain a benefit from using built assets such as roads.

Among the countries studied in the Global Built Asset Performance Index 2014, Mexico and Turkey are most dependent on built assets, each deriving 61% of their GDP from returns on them. In contrast, the share of Russian GDP which comes from returns on built assets is only 14%. The global average is 40%.

In absolute terms, China derives the greatest benefit from its built assets, with a US$ 6.9 trillion contribution to its GDP last year. It was followed by the US, where the benefit was put at US$ 5.6 trillion by Arcadis. It is perhaps no surprise that the biggest countries with the biggest infrastructures generate the most benefit in absolute terms from them. Other high-ranking countries on this measure include India, Japan, Germany and Mexico.

However, there is a different picture when looking at the benefit of built assets on a per capita basis. BY this measure, Singapore sees the greatest benefit from its built assets per head of population at US$ 29,500 per person. It is followed by Qatar at US$ 20,500 per person and the UAE at US$ 17,500 per person. The average for advanced economies is US$ 14,500 per person, but just US$ 4,000 per person across emerging markets.

Looking ahead, Arcadis says the best returns on built assets will be seen in developing countries, as they invest to bring their economies up to speed with more advanced areas of the world. However, it highlights some laggard countries, particularly in Latin America, where slower economic growth than in the past, infrastructure bottlenecks and rigid labour markets could threaten investment.

Arcadis says there is a clear relationship between built assets and the size of any country’s economy, and that the most affluent countries are those that proactively manage their built asset wealth. In contrast, allowing buildings and structures to age leads to economic decline.

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