private company. But if one includes government-owned companies,
this U.S. giant is only the fourteenth largest.^12 Saudi Arabia’s Aramco
and Iran’s NIOC have reserves of about 300 billion barrels! If one were
to value these reserves at only $3.30 a barrel, or 5 percent of the 2007
price, that would make each company worth about $1 trillion. That
shows how much wealth is still owned by governments around the
world. In many countries, gas, electric, and water facilities are still
owned and operated by government, and in many other industries, gov-
ernments have a large, if not a controlling, interest.
Even in such privatized countries as the United States, the federal,
state, and local governments own trillions of dollars of wealth in such
forms as land, natural resources, roads, dams, schools, and parks. There
is strong disagreement about how much of this wealth, if any, should be
privatized. But there is increasing awareness that privatized firms often
do experience efficiency gains. Growth of the world’s capital stock will
come not only from private entrepreneurs but from the privatization of
many government-owned assets.
THE WORLD IN 2050
We began this chapter with a look at the distribution of population, out-
put, and equity capital worldwide. Through most of the twentieth cen-
tury, the developed world produced most of the world’s output and
generated an even larger share of its capital.
But this dominance will not last. The success of market-oriented
economies in the last century provided a blueprint for the next. Twenty-
five years ago, China came around to accept the benefits of a market
economy. Fifteen years later, India did the same. The collapse of com-
munism in the former Soviet Union and Eastern Europe has broadened
the list even further. And many countries in Latin America, although not
all, have adopted the free-market principles that have given Chile the
second highest per capita income on the continent.
The Middle East and Africa have most certainly lagged. The Mid-
dle East is addicted to oil revenue and sectarian strife, and Africa is
slowly emerging from a dark period of misrule and exploitation. But
here too there has been some progress: the remarkable growth of Dubai
has shown the Arab world that oil need not be the cornerstone of pros-
perity, and Africa is experiencing increased economic activity. There is
178 PART 2 Valuation, Style Investing, and Global Markets
(^12) From Steve Forbes, “Fact and Comment,” Forbes, April 16, 2007, pp. 33–34.