True Wealth of Nations: Valuing Resources Beyond GDP as a Framework for Sustainable and Inclusive Economic Policy in the European Union

Abstract

Moving beyond Gross Domestic Product (GDP) as the sole measure of economic performance is increasingly critical for addressing the complex challenges of sustainable development. The Inclusive Wealth Index (IWI) offers a more comprehensive framework for assessing long-term sustainability by accounting for changes in produced, human, and natural capital. This paper contributes to this debate by examining the comparative dynamics of these three forms of capital in Greece in relation to European Union averages. Specifically, we employ a repeated-measures design and the mixed ANOVA method to analyse their interactions over time (1990–2020) and across regional contexts. The novelty is to cover the research gap on how the different capitals interact, with Greece serving as a critical case given its environmental vulnerabilities, economic challenges, and position within the European sustainability agenda. The empirical results demonstrate a consistent hierarchy (human > produced > natural), significant growth over time, and pronounced regional disparities, with Western and Northern Europe outperforming Eastern and Southern Europe in overall capital stocks. Moreover, human, produced, and natural capital differed significantly (${\eta }_p^2=0.967)$, with the EU-27 dominated by human and produced capital, while Greece lagged substantially (${\eta }_p^2=0.71$). A robust interaction effect indicated structural divergence (${\eta }_p^2=0.811$). The pairwise comparisons confirmed these results with very large effect sizes (Cohen’s d = 2.3–11.2 in the 95% CI). These findings underscore the importance of moving beyond GDP and highlight the policy relevance of inclusive wealth accounting for ensuring resilience and intergenerational equity.

1. Introduction

The limitations of Gross Domestic Product (GDP) as a measure of societal progress have been widely debated, particularly since the decline of the Fordic model of mass production and consumption, which prioritised industrial expansion and economic growth over environmental and social sustainability (Antonio & Bonanno, 2000; Jessop, 1995). Post-WWII optimism and an emphasis on rapid economic expansion contributed to an excessive reliance on growth, which in turn accelerated the depletion of natural resources and intensified pressures on natural ecosystems (Zolotas, 1981). This trajectory, linked to the linear “take-make-dispose” economy, has been criticised for generating persistent crises of environmental degradation, waste accumulation, and the overshooting of the Earth’s carrying capacity (Esposito et al., 2015; Halkos & Aslanidis, 2024; Stahel, 2019).

Additionally, one of the central debates in environmental economics concerns the substitutability of different forms of capital, i.e., natural (such as ecosystems), human (including values and ethics), and produced (or man-made, like machinery) (Aslanidis et al., 2025; Dasgupta, 2021). While proponents of weak substitutability argue that these forms of capital can be substituted to maintain welfare (also known as Solow-Hartwick sustainability), advocates of strong sustainability contend that the “critical natural capital” is non-substitutable due to its characteristics of irreplaceability, multifunctionality, and its role in maintaining ecosystem stability, and must be preserved independently (Andersen, 2006; Dasgupta, 2008; Gutés, 1996; Mancebo, 2013; Neumayer, 2013; Ott & Thapa, 2003; Payeur-Poirier & Nguyen, 2017; Victor et al., 1994). Despite the extensive theoretical debate, there remains limited empirical evidence comparing the relative importance of forms across countries and regions.

This paper contributes to this debate by examining the comparative dynamics of natural, human, and produced capital in Greece relative to European Union (EU) averages. Specifically, the study employs a repeated-measures design for the whole EU-28 sample and then a mixed ANOVA methodology for the EU-27 and Greece. The study analyses how these three forms of capital evolved between 1990 and 2020 across European regions.

This addresses an important research gap: while much has been written about weak and strong sustainability, there is insufficient empirical analysis of capital interactions in specific national contexts. Greece provides a particularly relevant case, given its environmental vulnerabilities, economic challenges, and the broader European sustainability agenda.

Three research questions (RQs) that can be posed are:

• RQ1: How have different forms of capital evolved over time across European regions (Northern, Eastern, Southern, and Western) between 1990 and 2020, and do these forms of capital differ significantly in their levels and regional distribution?
• RQ2: How do the stocks of human, produced, and natural capital compare specifically between the EU-27 and Greece during the period 1990–2020?
• RQ3: Does the composition of capital exhibit different structural patterns between the EU-27 and Greece, and what does this imply for sustainable development?

From these RQs, the hypotheses are formulated as follows:

H1: 

European regions experienced significant, but uneven, capital growth between 1990 and 2020.

H2: 

All forms of capital are significantly higher in the EU-27 than in Greece.

H3: 

The capital portfolio differs significantly between the EU-27 and Greece, with Greece showing greater reliance on natural capital.

The structure of the paper is as follows: Section 2 reviews the literature, covering the historic importance of GDP and also the influence of IWI as a beyond-GDP framework; Section 3 outlines the methodology; Section 4 presents the results; Section 5 discusses short- and long-term policy implications that can underpin the human and natural capital in Greece; and finally, Section 6 concludes the paper by highlighting key limitations and future research.

2. Literature Review

Measuring national progress has historically relied on GDP, yet its limitations in capturing social and environmental aspects have prompted the development of alternative metrics, such as the IWI. In the literature review, in Section 2.1, the “Beyond GDP” era marks a shift in how nations measure progress, recognising that GDP alone fails to capture the true well-being of societies and the sustainability of development. In this sense, in Section 2.2, the IWI has emerged as a more comprehensive alternative, incorporating produced, human, and natural capital to assess long-term economic and environmental sustainability. By accounting for factors such as education, health, and ecosystem services, the IWI offers a holistic view of national wealth and provides policymakers with a better foundation for achieving equitable and sustainable development.

2.1. Historical Importance of GDP

Sustainable development principles take into account the well-being of both current and future generations based on the notion of intra- and inter-generational equity, facilitating the design of people-oriented, socially acceptable, and planet-centred policymaking (WCED, 1987). This paper sheds light on how policymaking tools have evolved from pure economic thinking towards a more inclusive framework.

To begin with, in the interwar period, the foundations of GDP were established, mainly in the systems of national accounts of the United States of America (USA) and the United Kingdom (UK). The reasons for adopting GDP were to overcome the war-inflicted consequences of WWI and the economic turmoil due to the Great Depression, which began in 1929 and led to severe socioeconomic challenges such as poverty, unemployment, and underperformance in industry and business. Moreover, in 1944, GDP was further promoted, at the Bretton Woods conference, as an indicator of economic progress in building a new economic system after WWII.

Traditionally, the GDP has been used as the standard for measuring a country’s economic activity, rather than economic well-being. GDP is used as a tool to measure only the economic parameters in national accounts; therefore, it cannot provide a holistic framework for measuring human development (Costanza et al., 2009). For instance, under the expenditure approach, GDP in a simplistic form evaluates a national market’s annual performance by aggregating the value of all final goods and services in market prices (Mankiw, 2019). GDP derives from the concept of value-added (SNA, 2008), and it can be calculated with three different approaches that lead to the same result. The three approaches are (i) the production (or value-added), (ii) the income, and (iii) the expenditure approach. The expenditure approach is the most common way of presenting GDP calculations. Moreover, the national income accounting identity contains four generic elements, i.e., national consumption, investment, government expenditure, and net exports (exports minus imports) (Dornbusch et al., 2011, pp. 26–30).

For example, Kuznets (1934, pp. 1–5) highlighted the dangers of linking economic growth, as expressed in GDP, with socioeconomic well-being, as GDP does not take into account, inter alia, the services of home care or “relief and charity”. Additionally, Costanza et al. (2009) underscored the limitations of GDP, as it does not account for social capital formation or the depletion of natural resources. For this reason, several initiatives have been developed to reflect a more multidisciplinary approach within the scope of sustainable development that also considers the environmental and social factors under the “Beyond GDP” agenda.

2.2. An Alternative Measure for Well-Being: The Inclusive Wealth Index (IWI)

Recognizing GDP’s limitations in capturing long-term well-being and sustainable development, researchers have proposed comprehensive measures, among which the IWI has gained prominence. The inclusive wealth framework builds upon a substantial body of theoretical and empirical research. For example, the seminal works by Dasgupta & Mäler (2000), as well as Arrow et al. (2003a, 2003b), establish the equivalence between changes in social well-being and movements in inclusive wealth. Dasgupta (2001) offers a comprehensive examination of sustainable development and the significance of the wealth–welfare equivalence theorem. Agliardi et al. (2012) extend this theorem by incorporating a stationary stochastic process to model consumption dynamics. Further contributions by Dasgupta (2014) and Irwin et al. (2016) present accessible, non-technical interpretations of the wealth–happiness equivalence theorem and its subsequent developments.

The concept of the IWI was introduced in the 2012 Inclusive Wealth Report by the UN Environment Programme (UNEP) as a more comprehensive indicator of sustainable development (UNEP, 2023). Unlike traditional metrics such as GDP and the Human Development Index (HDI), which reflect only limited dimensions of prosperity, inclusive wealth accounts for produced, human, and natural capital, offering a more holistic perspective on national progress. Consequently, inclusive wealth per capita is increasingly used to assess nations’ sustainable development. The differences between the GDP, HDI, and IWI are presented briefly in

Table A1. Differences between GDP, HDI, and IWI. Sources: (Costanza et al., 2009; SNA, 2008; UNEP, 2023).

Indicator	Gross Domestic Product (GDP)	Human Development Index (HDI)	Inclusive Wealth Index (IWI)
Key focus	An index of economic performance	An index for measuring human wellbeing	An index that can measure sustainable development
Components	Total value of goods and services produced (typically in an annual basis)	Parameters such as life expectancy, education, income per capita etc.	Three types of capital: human, produced, and natural. *
Strengths	Widely used Easy to compute	Incorporates social dimensions Easy to interpret	Measures long term sustainability Incorporate all forms of capital Accounts for future consumption
Limitations	Ignores social and environmental factors. Short-term measure No account of sustainability.	Ignores natural capital Limited to three dimensions No account of intergenerational equity	Data intensive Less widely used in policymaking Complexity, especially the IWI adj.

* The IWI adj. also includes exogenous factors such as carbon damages, oil capital gains, and total factor productivity.

(Appendix B).

The case for IWI stems from the argument that relying solely on GDP overlooks the depletion of critical forms of capital that determine future human welfare. To address this limitation, the IWI was developed by integrating the biophysical and monetary values of natural, human, and produced capital. In this context, Managi et al. (2024) analysed data from 163 countries over a 30-year period and identified significant global losses in natural capital, especially in low-income nations where rapid population growth and uneven capital investment have worsened the situation. Their findings highlight the vital role of managing both natural capital and inclusive wealth in achieving sustainable development. Overall, the study positions the IWI as a practical tool for policymakers to guide investments that support recovery from crises (e.g., COVID-19) and align with the Sustainable Development Goals (SDGs), the Paris Agreement, and broader post-GDP agendas.

Similarly, Halkos et al. (2018) demonstrate the IWI’s potential to address other environmental crises, such as air pollution. By applying various data visualisation techniques, they revealed the multi-dimensional nature of the IWI across different geographical regions. More recently, a review by Kousar et al. (2025) identified four emerging trends in the inclusive wealth discourse: (i) the need to strengthen institutions to enhance competitiveness, (ii) the adoption of a holistic framework for biodiversity conservation, (iii) the promotion of inclusive wealth through green labour markets and green finance, and (iv) the advancement of green innovation.

To conclude, the IWI provides a holistic measure of sustainable development by incorporating produced, human, and natural capital, and it can guide environmental policy towards achieving the SDGs. Given Europe’s commitment to the Green Deal, climate neutrality, and the SDGs, applying the IWI would offer a more integrated and forward-looking assessment of sustainable development, helping European policymakers better align economic strategies with ecological resilience, social well-being, and long-term capital preservation. Overall, the evolution from GDP to IWI reflects a paradigm shift in measuring national progress, moving from a narrow focus on economic output toward a more integrated perspective on societal and environmental well-being. This conceptual progression underpins the subsequent analysis.

3. Materials and Methods

This section contains two subsections. Section 3.1 introduces the IWI framework, which extends welfare and utility theory to measure intergenerational welfare. Furthermore, Section 3.2 presents the statistical method used to estimate the effect sizes of the differences between the three forms of capital in Greece and the EU average.

3.1. The Inclusive Wealth Framework

The inclusive wealth framework extends the literature on welfare and utility (Agliardi et al., 2012; Arrow et al., 2003a, 2003b; Dasgupta, 2001, 2014; Dasgupta & Mäler, 2000; Irwin et al., 2016). The maximization of intergenerational welfare V(t) can be forecasted from three important parameters: (i) consumption (C), (ii) demographic changes (not modelled in this study), and (iii) the use of natural resources.

$$V_t=\left({\underset{\_}{K}}_{\left(t\right)}\right)={\int }_{t=s}^{\infty }\left[U\left({\underset{\_}{C}}_{\left(S\right)}\right)e^{\delta \left(s-t\right)}\right]ds,\delta >0$$

(1)

where, K(t) denotes the capital portfolio comprising natural (N), human (H), and produced (M) capital that are bestowed with use-value from the social capital, which is not part of the present analysis. Additionally, U(C(s)) is the economy-wide utility as a function of the consumption vector (C(s)), δ denotes the utility discount rate, t is time, and s an arbitrary initial time point (s $\ge 0$). Since sustainable development implies non-declining welfare over time, welfare maximisation is based on the principle of resource allocation. For brevity reasons, the full specification is omitted; for more details, please see UNEP (2023, pp. 87–90). Assuming that the change in the intergenerational welfare at time t is expressed as ΔV(t) and that it is differentiable, the IWI takes the following form:

$$IWI=r\left(t\right)+p_N\Delta N\left(t\right)+p_H\Delta H\left(t\right)+p_M\Delta M\left(t\right)$$

(2)

where $r\left(t\right)$ is the shadow price of time at t, and $p_i$(t) is the social value of the shadow price of the three forms of capital at time t. These shadow prices serve as weights for the IWI.

The above linear functional form of IWI may suggest that the capital stocks are assumed to be perfect substitutes in production; nevertheless, this is not justified in the wealth/welfare equivalence theorem (Gravelle & Rees, 2004, pp. 290–293). UNEP (2023) emphasises that, “the social value, or shadow prices, are a function of the stock of capital goods,” and that there is “a slight possibility of substitution” between the forms of capital. This notion can be a basis for further discussion on the weak/strong sustainability debate. In this context, social value refers to the implicit economic valuation of a unit of capital based not on its actual observed market value but on its marginal contribution to intergenerational well-being as presented in the IWI.

To account for exogenous adjustments, the adjusted IWI (Figure 1) incorporates: (i) population change, (ii) transnational externalities (GHGs and climate change), (iii) total factor productivity, and (iv) trade externalities of natural capital, particularly the estimation of oil price changes, which are highly interlinked with capital gains, especially for oil-exporting countries.

3.2. Data and Two Stages of Analysis

This study employs the IWI as the primary framework for assessing sustainable development in Europe between 1990 and 2020. Additionally, all the parameters are measured in USD (2015 constant prices), as presented in the descriptive statistics (

Table 1. Descriptive statistics.

	Population Total	Human Capital per Capita	Produced Capital per Capita	Natural Capital per Capita	IWI pc	IWI ADJ pc
Mean	17,677,065.87	181,431.95	100,151.98	17,194.92	298,778.85	283,943.14
Min	362,017.00	25,050.42	3828.98	368.48	39,279.57	38,324.12
Max	83,783,944.87	788,880.85	338,076.74	180,989.60	1,129,761.76	1,068,964.36
STDEV	22,237,207.46	137,367.57	66,728.76	23,213.37	206,149.34	193,181.97
Obs.	868
Countries	EU-28
Period	1990–2020

). The EU-28 countries were categorised into four regions: (1) Northern Europe (Denmark, Estonia, Finland, Latvia, Lithuania, and Sweden); (2) Eastern Europe (Austria, Croatia, Czechia, Hungary, Poland, Slovakia, and Slovenia), (3) Southern Europe (Bulgaria, Cyprus, Greece, Italy, Malta, Portugal, Romania, and Spain), and (4) Western Europe (Belgium, France, Germany, Ireland, Luxembourg, the Netherlands, and the United Kingdom of Great Britain and Northern Ireland). The UK is included, as Brexit took place in 2020.

The period was chosen to capture long-term trends in the three forms of capital, covering major EU policy milestones, economic crises, and the most recent available data. Regarding the sample, the EU-28 sample allows for a full overview of the Union (even before Brexit), while Greece is analysed separately as a case study to highlight country-specific sustainable development pathways and policy implications within the broader European convergence.

To evaluate temporal and regional differences in capital accumulation, a repeated measures general linear model (GLM) was first applied to the EU-28. This analysis was conducted using IBM Statistical Package for the Social Sciences (SPSS) version 29.0.0.0 (241). In this specification, time (1990–2020) and capital type (human, produced, and natural) were treated as within-subjects factors, while region (Northern, Eastern, Southern, and Western Europe) was the between-subjects factor. This design allowed the analysis of the main effects (time trends, capital type differences, and regional disparities) and interaction effects (e.g., year $\times$ capital). A second stage of analysis focused on the comparison between the EU-27 and Greece through a 2 $\times$ 3 mixed-model Analysis of variance (ANOVA). The country group was the between-subjects factor, while the three forms of capital served as within-subjects factors. This framework enabled the identification of structural differences in capital composition between Greece and the EU average. The choice of repeated measures GLM and mixed ANOVA is appropriate for this analysis because the dataset involves repeated observations of the same units (countries and regions) over time, with interdependent measures across different types of capital. Hence, this consequential analysis ensures a robust empirical framework for capturing both the temporal dynamics and the structural divergences that characterise inclusive wealth in Europe.

ANOVA is a statistical technique used to compare three or more means to test whether they differ significantly; furthermore, ANOVA can take more complex forms, such as the factorial within-subjects ANOVA and a repeated-measures or “mixed” (within-between-subjects) ANOVA (Schwartz et al., 2019). These designs require certain assumptions to be tested. For example, homogeneity of variance is typically assessed with Levene’s test under the null hypothesis that variances are equal, while within-subjects designs require homogeneity of covariance. Violations can also affect mixed models; in some cases, profile analysis is used as an alternative (Tabachnick & Fidell, 2019, p. 41). Another critical assumption is sphericity, which refers to the equality of pairwise error variances across repeated measures. With only two levels of a within-subjects factor, there is only one pair, so sphericity is trivially satisfied; SPSS still reports Mauchly’s test, rendering it supplementary. However, if there are more than two levels, then the result of Mauchly’s test needs to be nonsignificant (Strunk & Mwavita, 2024). Additionally, corrections can address violations of sphericity (e.g., Greenhouse-Geisser) (Field, 2018, p. 933).

Moreover, beyond significance testing and parameter estimation, ANOVA results are strengthened by effect size measures (also called “strength of association” or “treatment magnitude”), which indicate the proportion of variance in the dependent variable explained by the independent variable(s) (IVs).

However, partial eta-squared (${\eta }_p^2$) is often preferred to eta squared, as it captures not only the variance linked to the effect but also the error (Tabachnick & Fidell, 2019, p. 47). Additionally, Cohen’s d represents the standardised difference between two means (divided by their common deviation), although this measure becomes less practical in multivariate designs, where comparisons extend beyond a simple difference between two group means (Creswell, 2012, p. 195).

4. Results

This section focuses on the analysis of the IWI and capital stock trends in the EU-28 from 1990 to 2020, emphasising the balance among produced, human, and natural capital. Furthermore, specific geographical insights are presented. Next, the integrated sustainability strategies in the EU will be compared with those in Greece, showing the need to prioritise green recovery policies, environmental restoration, and investments in human development to align with the Agenda 2030 goals.

4.1. General Evolution of Inclusive Wealth in the European Union

This section interprets the evolution of capital stocks and inclusive wealth across EU-28 countries from 1990 to 2020. Drawing on per capita metrics and the adjusted IWI, the results highlight profound regional disparities in wealth accumulation and sustainability.

The descriptive results show that while many Western and Northern European countries experienced robust growth in both produced and human capital, this often came at the expense of declining natural capital, raising concerns about the long-term ecological foundations of their wealth. In contrast, several Southern and Eastern European countries, including Greece, showed more modest gains in inclusive wealth, reflecting economic vulnerabilities, slower capital accumulation, and sharper declines in environmental assets. Altogether, these patterns underscore the importance of balanced capital development and the need for integrated sustainability strategies across the EU.

In Figure 2, there is an overall increase in inclusive wealth, as most countries show a notable increase in inclusive wealth from 1990 to 2020 (additional comparisons in Figure A1 and Figure A2 (Appendix A)). The most notable example is Luxembourg, which shows the most dramatic increase, from 669 to 1069 thousand USD, followed by other high performers such as Denmark, Sweden, Ireland, and Austria. Furthermore, the middle performers in the EU-28 are countries like France, Germany, Belgium, and the Netherlands, which started with solid wealth levels in 1990 and continued to grow steadily. Similarly, the UK and Italy also improved, but at a slower pace than the leading countries.

There is a common pattern of slower wealth growth typical of Eastern and Southern European countries. More specifically, Bulgaria, Romania, Poland, Hungary, and Slovakia had relatively low inclusive wealth per capita in both years. Despite some growth, absolute wealth levels remained much lower than in Western Europe. For Greece, the adjusted IWI grew modestly from 158 to 217 thousand USD, indicating limited improvement in long-term wealth compared to the other countries.

To summarise, in the European Union, the inclusive wealth approach provides a deeper look at sustainable economic development than GDP. Having established the overall patterns of IWI in the EU-28, it is essential to examine the underlying capital stocks that drive these differences, allowing for a more nuanced understanding of how human, produced, and natural capital co-evolve over time.

4.2. Capital Stock Evolution in the European Union

This paper sheds light on the evolution of IWI and adjusted IWI in the EU-28, and further compares the EU-27 and Greece. The RQ1 requested how the capital stocks in the EU-28 perform across time; therefore, some notions are going to be introduced here in more detail. Figure 3 shows how the capital stocks change (on the y-axis) from 1990 to 2020 (on the x-axis).

The produced capital stock shows a steady and strong increase, reaching nearly 120% by 2020, indicating substantial investment in infrastructure, machinery, buildings, and technology over the 30-year period, suggesting sustained economic growth and accumulation of man-made assets in the EU-28.

Additionally, human capital increases gradually, reaching about 35% by 2020, reflecting improvements in education, health, and workforce productivity. This evolution shows that the growth is consistent but more moderate than for produced capital. Moreover, natural capital stock declines steadily, reaching about 30% by 2020, revealing the depletion of natural resources such as forests, ecosystems, clean water, and biodiversity. This decline highlights environmental sustainability concerns, as the gains in produced and human capital appear to come at the expense of natural capital.

Briefly, the EU-28 has experienced strong growth in produced capital and moderate growth in human capital since 1990. However, this has coincided with an important decline in natural capital, suggesting that economic and human development have not been ecologically balanced. Essentially, this trend raises questions about the long-term sustainability of economic growth if natural resources continue to be depleted. While the EU-28 provides a broad overview of capital dynamics, country-specific trajectories may differ substantially. Focusing on Greece offers an illustrative case of how national circumstances influence the growth and decline of each capital type, as will be presented in the next section. This leads to the conclusion that there is a need for integrated capital accounting and sustainable development policies that not only consider produced and human capital but also protect and restore natural capital. On this basis, investments in green infrastructure, ecosystem restoration, and circular economy models could help reverse the decline in natural capital.

4.3. Capital Stock Evolution in Greece

With the EU-28 capital stocks evolution in mind, we turn to the case study of Greece. Figure 4 illustrates the evolution in per capita capital stocks for Greece from 1990 to 2020. Produced capital rose steadily from 1990, peaking at about 50% by 2010, then flattened and remained stagnant through 2020. As a first observation, this trajectory aligns with the Greek debt crisis (2009–2010), likely stalling further infrastructure or asset growth.

The Greek human capital stock followed a similar upward trend, reaching about 45% by 2010; however, it experienced a slight reduction during 2012–2015, possibly reflecting emigration—the “brain drain” associated with the 2008 financial crisis—unemployment, or reduced investment in education and health during austerity. From 2015 onward, it recovered modestly and stabilised by 2020. However, the most crucial phenomenon was the evolution of the Greek natural capital stock, which declined continuously, falling to −33% by 2020. Especially around 2012, the decline accelerated, suggesting intensified environmental degradation, resource depletion, or reduced conservation efforts during economic hardship.

Overall, Greece lags behind the EU-28 in produced capital growth and exhibits a steeper decline in natural capital, as, over 1990–2020, the Greek produced capital was stagnant, whereas the European showed a strong growth. However, human capital growth is slightly higher than the EU average, possibly reflecting stronger early investments in education or healthcare.

Apparently, the impact of the financial crisis was severe for Greece. Greece saw notable growth in human and produced capital from 1990 to 2010, but the financial crisis halted produced capital accumulation and slightly impacted human capital. Even though natural capital was steadily depleted, with an alarming decline during crisis years, mainly due to cuts in environmental regulation and enforcement, increased exploitation of natural resources, and neglect of conservation investments.

Hence, the Greek government should focus on recovery strategies that reintegrate environmental priorities, ensuring that economic growth doesn’t continue to erode Greece’s natural assets. In addition, there is an opportunity to revitalise produced and human capital through sustainable investments in green jobs, eco-tourism, and renewable energy. In essence, Greece’s path forward under the Agenda 2030 should address the triple balance of economic resilience, social capacity, and ecological sustainability. Moreover, having analysed Greece’s capital stock evolution, we now position these results within a comparative framework by contrasting Greece with the EU-27; the structural differences of each capital can be more clearly assessed.

4.4. Monitoring Inclusive Wealth in EU-28

This section examines the capital stock evolution in the EU-28 by applying repeated measures GLM and addresses RQ1 based on H1. The model specification covered 1990–2020 and treated the three types of capital (human, produced, and natural) as within-subjects factors, with regions (Northern, Eastern, Southern, and Western Europe) as the between-subjects factor. The design tests whether capital values differ across the 31 annual time points and capital types, and whether these effects are consistent or vary by region.

Mauchly’s test indicated violations of sphericity for the multi-level time factor, so the Greenhouse-Geisser corrections were applied for those effects. In addition, the Bonferroni-adjusted pairwise comparisons (post hoc tests) were used to explore significant main effects.

The mean capital values across regions and forms of capital are summarized in

Table 2. Descriptive values of the three forms of capital at a regional level.

Region	Human Capital	Produced Capital	Natural Capital	Average
Northern Europe	188,441.91	112,099.00	39,551.47	113,364.13
Eastern Europe	117,461.79	78,573.11	9480.44	68,505.11
Southern Europe	106,850.02	61,479.31	8909.08	59,079.47
Western Europe	326,146.03	158,129.85	15,297.79	166,524.56
Average	184,724.94	102,570.32	18,309.70

, which shows that human capital exhibited the highest mean values across all regions ($\approx$184.7 thousand USD), followed by produced capital ($\approx$102.5 thousand USD), and natural capital ($\approx$18.3 thousand USD). Furthermore, when monitoring the regional values, Western Europe ($\approx$166.5 thousand USD) had the highest overall values, followed by Northern Europe ($\approx$113.3 thousand USD), whereas Eastern ($\approx$68.5 thousand USD) and Southern ($\approx$59 thousand USD) Europe showed much lower capital stocks.

The results of the within-subjects effects show that there is a significant main effect of time (F = 84.393, p < 0.001, ${\eta }_p^2$ = 0.779), indicating a strong upward trend in capital accumulation from 1990 to 2020. Moreover, the type of capital presented also a significant main result (F = 61.895, p < 0.001, ${\eta }_p^2$ = 0.721) in which human capital was significantly higher than both produced and natural capital, from which, the produced capital exceeded natural capital (all p < 0.001). Moreover, the region also played a significant role in the main effect (F = 5.768, p = 0.003, ${\eta }_p^2$ = 0.419).

Turning to the interaction effects in order to further observe potential interrelationships among the factors. Regarding the interaction effect on “year $\times$ type of capital,” the trajectories of growth differed significantly by capital type (F = 50.040, p < 0.001, ${\eta }_p^2$ = 0.676), with human and produced showing steep increases, while the natural capital remained low throughout the period. Additionally, the composition of the three forms of capital varied significantly across regions (F = 5.76, p < 0.003, ${\eta }_p^2$ = 0.419). More specifically, Northern Europe had exceptionally high human capital relative to natural capital, whereas Western Europe presented a more balanced distribution with high values across all types of capital. By contrast, Eastern and Southern Europe consistently lagged across all capital categories, indicating potential pressures on inclusive wealth accounting. It should be mentioned also that the interaction between “region $\times$ year” and “region $\times$ year $\times$ type of capital” was also significant (p < 0.05), indicating that temporal trends in capital accumulation varied across regions and the three forms of capital.

The differences between the European regions revealed notable differences in

Table 3. Regional means and post hoc tests between-subjects effects of region (Bonferroni adjusted).

Region	Mean	Std. Error	95% Confidence Interval (Lower Bound; Upper Bound)
Northern Europe	113,364.12	22,484.30	(66,958.79; 159,769.45)
Eastern Europe	65,124.08	20,816.42	(22,161.09; 108,087.07)
Southern Europe	60,859.66	19,471.98	(20,671.47; 101,047.86)
Western Europe	166,524.55	20,816.42	(123,561.57; 209,487.54)
Comparisons	Mean Difference	Std. Error	95% Confidence Interval (Lower bound; Upper bound)
Western Europe vs. Northern Europe	53,160.42	30,640.94	(–34,935.18; 141,256.04)
Western Europe vs. Eastern Europe	101,400.47 *	29,438.86	(16,760.95; 186,040.00)
Western Europe vs. Southern Europe	105,664.89 *	28,504.06	(23,713.02; 187,616.76)

Based on estimated marginal means, *. The mean difference is significant at the 0.05 level and adjustment for multiple comparisons: Bonferroni.

, as the Bonferroni-adjusted post hoc tests showed that only certain pairs differed significantly. As mentioned before, Western Europe stands out as it has significantly higher overall capital than Eastern Europe (mean difference 101.4 thousand USD, p = 0.013) and Southern Europe (mean difference 105.6 thousand USD, p = 0.007). However, no other regional differences have been identified, as Western Europe, despite having a high human capital, did not significantly differ from Northern Europe (the gap was only 53.1 thousand USD, p = 0.573). Likewise, moderate differences among the remaining regions were not significant after adjustment. To summarize, Western Europe is in its own upper tier, whereas the remaining regions cluster to some extent (with Northern Europe being on the upper end of that cluster). Hence, it can be concluded that Western European countries might have had policies or conditions especially conducive to capital accumulation (across all forms) over 1990–2020, whereas Eastern and Southern Europe were the laggards in inclusive wealth accumulation. Having this in mind, the following table presents the results by capital form.

In

Table 4. Post hoc of capital types (Bonferroni adjusted).

Form of Capital	Mean	Std. Error	95% Confidence Interval (Lower Bound; Upper Bound)
Human Capital	184,227.86	20,951.00	(140,987.12; 227,468.60)
Natural Capital	18,285.93	3764.44	(10,516.50; 26,055.36)
Produced Capital	101,890.52	9885.07	(81,488.72; 122,292.32)
Comparisons	Mean Difference	Std. Error	95% Confidence Interval (Lower bound; Upper bound)
Human Capital with Natural Capital	165,941.92 *	20,401.56	(113,435.62; 218,448.22)
Human Capital with Produced Capital	82,337.33 *	12,498.94	(50,169.55; 114,505.12)
Produced with Natural Capital	83,604.58 *	9742.16	(58,531.75; 108,677.42)

Based on estimated marginal means, *. The mean difference is significant at the 0.05 level and adjustment for multiple comparisons: Bonferroni.

, all pairwise comparisons among the three types of capital were statistically significant (Bonferroni-adjusted, p < 0.001). In essence, human capital was significantly higher than natural capital by about 165 thousand USD (p < 0.001), and similarly, higher than produced capital by roughly 82.3 thousand USD. Furthermore, produced capital exceeded natural capital by approximately 83.6 thousand USD (p < 0.001). These results exhibit extremely large differences, reflecting the earlier disparity in mean values; the confidence intervals for the mean differences do not cross zero in any comparison, underscoring the robustness of these gaps. From a practical perspective, these results confirm distinct magnitudes for each form of capital; for example, the relatively low values of natural capital suggest that policymakers should urgently take measures in order to preserve and conserve the natural capital in Europe.

Overall, the results indicate that capital accumulation has increased markedly between 1990 and 2020, with human capital consistently dominating the other forms of capital, addressing RQ1. More specifically, Western Europe led in capital stocks, significantly outperforming Eastern and Southern Europe. Moreover, Northern Europe, while not significantly different from Western Europe, illustrated a particularly strong reliance on human capital. The disparity between human and natural capital was substantial in every region, alerting policymakers to an apparent imbalance in capital composition across Europe. Therefore, given these important differences between Western and Southern Europe, the next section compares Greece with the rest of the EU and will show the extent to which Greek capital accumulation needs to be improved in order to realign with the European convergence policies on sustainable development.

4.5. Comparing Inclusive Wealth Between EU-27 and Greece

This analysis conducted a 2 (geopolitical entities) $\times$ 3 (types of capital) mixed-model ANOVA, as a GLM with repeated measures, supplemented with paired t-tests, applying a beyond GDP framework in a simulated inclusive wealth framework, in which the types of capital (i.e., human, produced, and natural) served as the within-subject factor, and the geopolitical entities (EU-27 and Greece) as between-subject factors. The descriptive statistics are presented in

Table 5. Descriptive Statistics for Capital Types by Country Group, the mean values are presented, and the standard deviation is in parentheses.

Type of Capital	EU-27	Greece	Total
Human Capital	184,522.22 (17,356.28)	97,994.66 (13,147.44)	141,258.44 (46,212.56)
Produced Capital	100,851.52 (24,214.63)	81,264.29 (13,320.98)	91,057.91 (21,751.44)
Natural Capital	16,996.90 (2160.20)	22,541.38 (2926.77)	19,769.14 (3784.05)

, where the EU-27 has substantially higher human and produced capital, while Greece shows relatively higher natural capital. This section addresses RQ2, showing how the capital forms perform and whether they exhibit similar or different structural patterns.

Table 6. Multivariate Tests of within-subject factors based on type of capital.

Effect	F	df	p-Value	Partial η2
Type of Capital a	9396.581	2, 59	<0.001	0.9968
Type of Capital × ID a	2831.869	2, 59	<0.001	0.9896
ID (Between-Groups)	148.158	1, 60	<0.001	0.7117

^a Results based on Pillai’s trace.

presents the results of ANOVA, which revealed a significant main effect of capital type, F(2,59) = 9396.6, p < 0.001, η² = 0.997, with human capital values exceeding produced and natural capital across groups. In addition, a significant between-subjects effect of country group was also observed, F(1,60) = 148.2, p < 0.001, η² = 0.712, indicating that the EU-27 consistently outperforms Greece in aggregate capital values. Importantly, there was a strong interaction between capital type and geopolitical entity, F(2,59) = 2831.9, p < 0.001, η² = 0.990. Overall, the results confirmed that while the EU-27 exhibits much higher levels of human and produced capital, Greece shows relatively greater reliance on natural capital. The analysis also reports tests of within-subjects effects: for the types of capital, it is ${\eta }_p^2$ = 0.966, whereas the interaction effect (types of capital $\times$ ID) is ${\eta }_p^2$ = 0.811. Hence, the results show an important structural difference between Greece and the EU-27 for the three forms of capital, answering the RQ2. Moreover, based on H3, this shows how the EU-27 outperforms Greece in human and produced capital and underscores the critical role of natural capital in Greece in achieving sustainable development.

It should be noted that the null hypothesis of Box’s test (equality of covariance) is rejected (Box’s M = 55.95 and p < 0.001), but given the robustness of Pillai’s Trace (the most robust statistic under violation of this assumption) to such violations, the reported results are considered reliable. Moreover, the hypothesis of sphericity is violated for Mauchly’s test (Mauchly’s W = 0.118 and p < 0.001), so the Greenhouse-Geisser correction was applied (epsilon = 0.531) (aerd statistics, 2025). We used the Greenhouse-Geisser test instead of Huynh-Feldt (epsilon = 0.542) due to the fact that epsilon is below 0.75. Lastly, Levene’s tests indicated violations of homogeneity of variance for produced capital (p < 0.001), and, to some extent, for natural capital (p = 0.091 based on the mean and p = 0.099 based on the trimmed mean); therefore, the results imply that between-group comparisons for these two forms of capital should be interpreted with caution. To conclude, given the magnitude of group differences and converging evidence from pairwise comparisons, the conclusions are unlikely to be affected.

Table 7. Estimates and pairwise comparisons between types of capital with estimated marginal means.

Type of Capital	Mean (Std Error)	95% Confidence Interval
Human Capital	141,258.43 (1955.34)	(137,347.17; 145,169.70)
Produced Capital	91,057.90 (2481.86)	(86,093.43; 96,022.37)
Natural Capital	19,769.14 (326.67)	(19,115.70; 20,422.57)
Comparison	Mean Difference (Std Error)	95% Confidence Interval for difference **
Human Capital with Produced Capital	50,200.53 * (729.73)	(48,740.85; 51,660.21)
Human Capital with Natural Capital	121,489.29 * (2252.73)	(116,983.15; 125,995.44)
Produced Capita with Natural Capital	71,288.76 * (2755.89)	(65,776.14; 76,801.38)

* The mean difference is significant at the 0.05 level. ** Adjustment for multiple comparisons: Least Significant Difference (equivalent to no adjustments).

presents the estimates and the pairwise comparisons of the three forms of capital. More specifically, the mean estimates of human, produced, and natural capitals are 141, 91, and 19 thousand USD, respectively. Furthermore, the paired t-tests within groups confirmed that human capital is by far the highest in monetary terms, followed by produced and natural capitals (all p < 0.001), with effect sizes ranging from large to extremely large (Cohen’s d = 3.21–11.17), as shown in

Table 8. Paired-samples test within groups.

Comparison (Pair)	Mean Difference (SD)	t-stat	Cohen’s d (95% CI)	Hedges’ Correction (95% CI)
EU-27
Human Capital–Produced Capital	83,670.69 (7490.84)	62.190	11.170 (8.33; 14.00)	10.888 (8.12; 13.64)
Human Capital–Natural Capital	167,525.31 (19,327.00)	48.261	8.668 (6.45; 10.87)	8.449 (6.29; 10.59)
Produced Capital–Natural Capital	83,854.62 (26,128.03)	17.869	3.209 (2.32; 4.09)	3.128 (2.26; 3.98)
Greece
Human Capital–Produced Capital	16,730.37 (3149.33)	29.578	5.312 (3.93; 6.69)	5.178 (3.82; 6.52)
Human Capital–Natural Capital	75,453.28 (15,992.05)	26.270	4.718 (3.48; 5.95)	4.599 (3.38; 5.80)
Produced Capital–Natural Capital	58,722.91 (16,096.70)	20.312	3.648 (2.66; 4.63)	3.556 (2.59; 4.51)

Note: Effect sizes are reported as Cohen’s d because Hedges’ g yielded nearly identical values, and therefore, they are omitted from the table. Cohen’s d uses the sample standard deviation of the mean difference, whereas Hedges’ correction uses the sample standard deviation of the mean difference, plus a correction factor.

. Essentially, these findings highlight both the magnitude of capital disparities between Greece and the EU-27 and the structural differences in how capital types are distributed. Cohen’s d and its confidence interval results are presented to reaffirm the size effect.

Overall, the results demonstrate substantial and systematic differences in capital composition between the EU-27 and Greece according to the inclusive wealth framework. It is worth reiterating the core results: human capital emerged as the dominant component in both groups, followed by produced and natural capital. However, the EU-27 exhibited significantly higher levels of human and produced capital, whereas Greece showed relatively greater reliance on natural capital. Based on the mixed ANOVA results, these differences were statistically robust, with very large effect sizes, and remained consistent despite minor violations of model assumptions. The findings underscore not only the scale of disparities but also the distinct structural profiles of capital accumulation across the two economies, providing a basis for further investigation into their implications for long-term growth and resilience. Nevertheless, given the well-documented economic challenges faced by Greece in recent decades, these results highlight the value of comparing its capital composition with that of the broader EU-27, providing a foundation for the subsequent discussion of the structural drivers of divergence and their policy relevance.

5. Discussion and Policy Implications for the Inclusive Wealth Approach in Greece

Given that produced capital is rising in the EU-28, this paper seeks to shed light on factors that can improve the other two types of capital, i.e., human and natural capital. Regarding RQ1, capital stocks evolved unevenly across European regions, confirming H1 regarding the disparities between Western and Southern Europe. Moreover, RQ2 examined the differences between the EU-27 and Greece, showing that the EU-27 consistently maintained higher human and produced capital, whereas Greece lagged in both, further confirming H2. Moreover, RQ3 tested for structural divergence and revealed that the EU-27’s capital portfolio is dominated by human and produced capital, whereas Greece relies mainly on natural capital, confirming H3. Overall, these results provide a basis for policy implications, as regional imbalances (RQ1) suggest that strategies should address convergence gaps across Europe, particularly in the South (see RQ2 and RQ3).

The documented shortfall in Greece’s human and natural capital relative to the EU (as in RQ2) underscores the urgency of addressing key drivers of human capital; similarly, Greece’s structural reliance on natural capital (RQ3) highlights the need to protect the natural environment. In the former case, human capital can be strengthened through (i) improved educational quality and innovation, (ii) employment opportunities for skilled workers, (iii) addressing brain drain, and (iv) strengthening trust towards institutions and civic culture. In the latter case, natural capital policies should focus on (i) sustainable land and forest management, (ii) protection of marine and coastal ecosystems, (iii) circular economy and waste management, and (iv) integration of cultural-ecological heritage into policymaking.

5.1. Policies for Improving Human Capital in Greece

Table 9. Policies for human capital improvement in Greece.

Policy Pathway	Importance on Local Economy, Society, Environment	Linkage to SDGs	Ref.
Improved educational quality and innovation	Policies for students in insular areas (e.g., Thrace, Greece). Policies for people inner-city neighbourhoods. Policies for students in mountainous settlements (e.g., internet).	SDG 4	(Benos & Karagiannis, 2016; Verdis et al., 2019)
Employment opportunities for skilled workers	Incentives for private sector innovation. Deal with barriers for startups. Retain talent. Protect vulnerable people (young, women, old workers). Deal with “jobless growth” and support lifelong learning. Focus on ICT, including gender-based targets.	SDG 8	(Bulman, 2020; Pappas et al., 2018; Tsiboukli & Efstratoglou, 2024)
Dealing with brain drain	Provision of financial incentives Provision of job-related motives	SDG 10	(Panagiotakopoulos, 2020; Theodoropoulos et al., 2014)
Trust towards institutions and civic culture	Crisis in social values Dealing with political corruption Monitoring of the Greek shadow economy	SDG 16	(Bitzenis et al., 2016; Halkos et al., 2025; Herzfeld, 2016)

presents policies for human capital improvement in Greece. Initially, the quality of education and innovation in Greece should be the main priorities; policymakers should invest in modernising curricula, research, and technical education aligned with global market needs. For example, a study showed that upper secondary and tertiary education could enhance labour productivity, while primary education reduces it. Moreover, human capital quality indicators exhibit a positive association with productivity, and therefore, policies should account for education quality and spillovers and place emphasis on higher education to improve labour productivity in Greece (Benos & Karagiannis, 2016).

5.1.1. Short-Term Priorities for Human Capital

However, policymakers should examine solutions for students from mountainous settlements, insular areas (e.g., Pomakohoria in Northern Greece), and inner-city neighbourhoods because students from these places are much less likely to achieve a score that would allow them to enter one of the country’s higher educational institutions (Verdis et al., 2019). Thus, policymakers should focus on solutions to address such cases because the geographical factors can undermine students’ educational path and can impact SDG4.

Another important factor that could strengthen human capital in Greece is the provision of employment opportunities for skilled workers through incentives for private sector innovation and reduced barriers for startups to retain talent domestically. The Greek labour market faced the COVID-19 crisis with persistent unemployment and structural weaknesses, particularly affecting women, youth, and older workers. On the one hand, emergency social protection helped mitigate the immediate impact, mainly with EU support, but on the other hand, high taxes and limited support for low-paid workers continue to fuel informality and insecurity (Bulman, 2020). Tailor-made solutions for employment opportunities can lead to the achievement of SDG8 on decent work and economic growth, as the creation of new jobs or retraining of employees can lead to better innovation capacity in Greece.

A study examined employment trends in Greece from 2011 to 2022, revealing that even though there was economic growth, many jobs were destroyed due to the change in operational needs. This paradox is called “jobless growth” and highlights the urgent need for strategic lifelong learning to address shifting occupational demands (Tsiboukli & Efstratoglou, 2024). For example, the impact of Information and Communication Technology (ICT) on women’s employability, entrepreneurship, and managerial career prospects in Greece can be an interesting factor to identify current gaps and training needs. Despite recognising ICT skills as vital for success, many women feel underrepresented in the digital sector. Increasing female participation in ICT is seen as a key strategy to address Greece’s digital gap and economic challenges (Pappas et al., 2018).

Additionally, the “Greek Brain Drain” phenomenon involved a growing wave of highly educated graduates migrating abroad due to limited demand for skilled labour domestically. This trend, which began before the economic crisis, intensified in the years that followed. It has posed a serious challenge to national development by depleting the country’s knowledge base (Theodoropoulos et al., 2014).

5.1.2. Long-Term Priorities for Human Capital

Moreover, another study found that 65% of highly skilled Greeks emigrated not for economic reasons (only 35% cited financial or job-related motives) but due to widespread political corruption, a crisis of social values, and a self-serving civic culture. The findings challenge the narrative that brain drain is purely fiscal, instead highlighting deep-rooted cultural and institutional issues as core drivers (Panagiotakopoulos, 2020). Hence, policies to improve human capital in Greece should focus on tackling corruption and offer targeted reintegration initiatives and tax incentives for returnees to attract expatriate professionals. Such policies can underpin the reduction of inequalities and retain or attract skilled people in their place of birth, also addressing regional disparities and supporting inclusive economic development.

Another challenge is “human insecurity”, which is widespread due to the adverse impacts of globalisation and multiple crises, highlighting the urgent need for integrated policies to protect human security by combating corruption (Halkos et al., 2025). Tackling corruption in Greece is particularly challenging because of a cultural phenomenon known as “fear of duties” (efthinophovia, in Greek) (Herzfeld, 2016), which undermines transparency, fosters political clientelism, and hampers efforts to strengthen meritocracy. This environment contributes to the persistence of the “Greek shadow economy” and erodes public trust in institutions (Bitzenis et al., 2016). Dealing with corruption and strengthening trust in institutions can promote transparency and support the SDG16.

To summarise, the resilience of Greek human capital should be supported by the above policy plans, either urgent actions in education and employment opportunities, or structural reforms to address brain drain and combat corruption. Firstly, the strengthening of educational quality and the promotion of innovation could pave the way for further expansion of policies regarding SDG4. Secondly, the provision of employment opportunities for skilled workers (especially women) can boost SDG8 and ameliorate human capital in Greece. Thirdly, dealing with brain drain in Greece is a central policy issue, as it can lead to the reduction of inequalities and underpin the achievement of SDG10. Finally, corruption in Greece seems to be the most pressing challenge, suggesting that the achievement of SDG16 is critical for future intergenerational equity.

5.2. Policies for Improving Natural Capital in Greece

In the short term, Greece should urgently protect its forests and biodiversity, expand marine conservation, tackle pollution, and provide immediate support for circular economy adoption. Furthermore, in the long run, embedding socio-cultural values into environmental planning, as well as achieving a full circular economy transition, is essential.

5.2.1. Short-Term Priorities for Natural Capital

Table 10. Policies for natural capital improvement in Greece.

Policy Pathway	Importance on Local Economy, Society, Environment	Linkage to SDGs	Ref.
Sustainable land and forest management	Update of the land and forest management laws in Greece in line with the EU framework. Promotion of community-based forest management. Involvement of local stakeholders on biodiversity protection.	SDG 15	(Aslanidis et al., 2025; European Commission, 2021; Evelpidou et al., 2021; Kalogiannidis et al., 2023; Spanos et al., 2021; Tzamtzis et al., 2023)
Marine and coastal ecosystem protection	Update of the marine and coastal management laws in Greece in line with the EU framework. Expansion of marine protected areas (e.g., in critical habitats). Pollution control campaigns (e.g., plastic waste, agricultural runoff).	SDG 14	(Andrea et al., 2020; Dikou & Dionysopoulou, 2011; Economou et al., 2020; Karantoni et al., 2023; Kyvelou & Ierapetritis, 2020)
Circular economy and waste management	Adopt and comply with circularity criteria, policy tools, and plans. Promotion of prevention and reuse actions. Financing tools for bioeconomy. Focus on critical raw materials, fuels, and plastics.	SDG 12	(Greek Ministry of Environment and Energy, 2018; Ioannidis et al., 2023; Trigkas et al., 2020)
Integration of cultural-ecological heritage in environmental policymaking	Integration of socio-cultural aspects in environmental policy. Highlight the role of heritage on environmental stewardship.	SDG 4, SDG 11, and SDG 15	(Pavlidis et al., 2022; Schismenos et al., 2019; Svoronou & Holden, 2005; Aslanidis et al., 2025; Halkos & Aslanidis, 2025)

presents policies for natural capital improvement in Greece. Initially, it is pivotal to implement sustainable land and forest management to protect the rich Greek biodiversity hotspots. In forests specifically, the most recent Greek law on forest protection is based on Law 998/1979 (regarding protection and preservation, development, and improvement of forests) and Law 4280/2014 (environmental improvement and urban planning). Apparently, it is important to implement community-based forest management programmes that involve local stakeholders in biodiversity protection and the restoration of degraded lands, especially due to environmental risks (e.g., forest fires) (Evelpidou et al., 2021) and their socio-psychological effect (e.g., eco-anxiety or social unrest) (Aslanidis et al., 2025; Kalogiannidis et al., 2023). For example, policies should enforce stricter regulations against illegal logging and promote reforestation initiatives to combat desertification and preserve terrestrial ecosystems (Spanos et al., 2021; Tzamtzis et al., 2023). The above practices would allow the promotion of SDG 15 on life on land, and they can safeguard important aspects of the Greek natural capital. The EU forests (and other wooded land) cover over 43.5% of land are, which is valuable for human health and wellbeing and the most recent policy was proposed in 2021, entitled the “New EU Forest Strategy for 2030”, which might be adopted in 2025 (European Commission, 2021) and is part of the European Green Deal (EC, 2019).

In Greece, there are several regulations that protect the marine and coastal ecosystems (e.g., Law 3199/2003, Law 4042/2012, Law 4037/2012) that include aspects of the EU’s institutional framework in the field of water policy under Directive 2000/60/EC (with the most recent amendment in 2014) (European Parliament, 2000). The establishment and expansion of marine protected areas are a necessary step to conserve critical habitats and prevent overfishing. Moreover, Greece should intensify pollution control campaigns targeting plastic waste and agricultural runoff, which threaten coastal waters (Andrea et al., 2020; Economou et al., 2020), fisheries (Kyvelou & Ierapetritis, 2020), and marine biodiversity (e.g., animals in national marine parks) (Dikou & Dionysopoulou, 2011; Karantoni et al., 2023). Overall, Greece advances SDG14 by implementing EU-aligned marine protection laws, expanding marine protected areas, and addressing pollution from plastics and agriculture; essentially, these actions aim to conserve biodiversity, prevent overfishing, and ensure sustainable coastal resource use.

Moreover, regarding the adoption of circular economy policies in Greece, in 2018 the core institutional framework was provided by the Greek Ministry of Environment and Energy (2018) and called “National Strategy of Circular Economy” (NSCE). The Greek NSCE has several targets that include, inter alia, the implementation of the circularity criteria, policy tools, and plans; the integration of prevention and reuse actions in local waste-management strategies; and the financing of actions and programmes for sectors such as bioeconomy, critical raw materials, fuels, and plastics, to name but a few. The Greek NSCE has prepared the Greek economy to adopt the more novel Circular Economy Action Plan (CEAP) from the European Union that includes several aspects of the Greek—or other nations’—prototypes and is in line with SDG12. The CEAP is an important EU strategy that can lead to decarbonisation and ultimately to a Net Zero economy by 2050, as it is the goal of the European Green Deal (EC, 2019; Halkos & Aslanidis, 2023).

5.2.2. Long-Term Priorities for Natural Capital

In Greece, there are significant obstacles in adopting CE principles due to limited innovation, selective strategies, and hesitancy towards full transition, given that even large firms need support through this complex transformation (Trigkas et al., 2020). However, based on a study on Greek citizens’ opinions regarding renewable energy and the circular economy, the findings showed strong public awareness and support for renewables, with higher education levels correlating with greater willingness to invest in and accept renewables (Ioannidis et al., 2023). Furthermore, digitalisation influences circular economy performance: a positive link was found between digital practices, business innovations, and circular economy success, especially in digitally focused industries; therefore, digitalisation is a key driver (Kalogiannidis et al., 2022).

Another pivotal policy for promoting Greek natural capital is to integrate the socio-cultural aspects linked to the environment. An initiative that incorporates ecosystem services would support the conservation of cultural landmarks and traditional practices within their natural contexts (Halkos et al., 2024; Sachs & Flanagan, 2022). This approach encourages sustainable management that respects both local communities and ecosystems, environmental stewardship, and economic development (e.g., eco-tourism) (Pavlidis et al., 2022; Schismenos et al., 2019; Svoronou & Holden, 2005). Ultimately, the valuation of cultural identity alongside ecological integrity can pave the way for policies that can create more inclusive, vibrant, and sustainable urban and rural spaces (Aslanidis et al., 2025; Halkos & Aslanidis, 2025).

6. Conclusions

The present paper emphasises the need to move beyond GDP as the sole measure of economic performance and adopts the IWI to assess sustainable development in the EU-28 from 1990 to 2020. Using repeated measures GLM for the EU-28 and a mixed ANOVA between the EU-27 and Greece. The study addresses a key research gap by empirically examining how capital accumulates and depletes, with Greece serving as a critical case due to its environmental vulnerabilities and economic turmoil.

The three RQs guided the empirical analysis. Regarding RQ1, the results confirmed that while capital stocks increased significantly across Europe between 1990 and 2020, growth was uneven: human capital consistently exceeded the other forms of capital and mainly in Western Europe (H1 confirmed).

Regarding RQ2, the mixed ANOVA revealed that the EU-27 held significantly higher stocks of human and produced capital than Greece, with large effect sizes (H2 confirmed). More specifically, the mixed ANOVA revealed significant differences among capital types (${\eta }_p^2=0.99)$ with a consistent hierarchy of human capital surpassing the other two forms of capital, further reaffirmed by the pairwise comparisons. Furthermore, the between-subjects effects indicated that the EU-27 maintained higher levels of human and produced capital than Greece (${\eta }_p^2=0.71)$.

Finally, regarding RQ3, the interaction effects demonstrated a strong interrelation between the form of capital and the geopolitical entity (${\eta }_p^2=0.81)$, in which the EU-27 is characterised by a capital structure dominated by human and produced capital, whereas Greece demonstrates relatively higher levels of natural capital reliance (H3 confirmed). The within-country paired-samples tests reaffirmed this phenomenon with extremely large effect sizes (Cohen’s d ranging from 2.3–11.2 in 95% CI). Overall, the empirical findings show that there are apparent disparities in capital accumulation between Greece and the EU-27, providing empirical evidence that the IWI captures both absolute and structural differences in capital that GDP alone cannot reveal.

The findings also underpin several broader conclusions. First, inclusive wealth provides a comprehensive capital-based measure for sustainable development, linking the discounted present value of all future consumption possibilities to a weighted sum of capital assets, or wealth, which forms the productive base of economic output. Under the inclusive wealth accounting framework, capital assets are not only intertemporal means of production but also direct contributors to human well-being, fulfilling the consumption needs of the current population.

Second, since 1990, the EU-28 has experienced robust growth in produced capital and moderate gains in human capital, accompanied by a marked decline in natural capital. This pattern highlights the ecological imbalance underlying economic and human development and emphasises the urgent need for integrated capital accounting and development policies that simultaneously safeguard produced, human, and natural capital assets. On this basis, investments in green infrastructure, ecosystem restoration, and circular economy models are essential to halt and reverse the erosion of natural capital.

Third, the case study of Greece calls for recovery strategies that embed environmental priorities at their core, ensuring that economic growth does not further degrade the country’s natural assets. Therefore, policy implications include integrating cultural and spiritual values into environmental planning, recognising sacred and heritage landscapes, and promoting eco-spiritual tourism. At the same time, there is a valuable opportunity to strengthen produced and human capital through sustainable investments in green jobs, eco-tourism, and renewable energy. Ultimately, Greece’s path towards the Agenda 2030 must address the interlinked goals of economic resilience, social capacity, and ecological sustainability.

This study has several limitations that should be acknowledged. First, the analysis is constrained by the availability and coverage of IWI, which, although comprehensive, may omit certain intangible forms of capital such as socio-cultural and spiritual parameters. Second, the study period does not cover recent crises such as the COVID-19 pandemic or the inflation due to geopolitical conflicts because the data availability is until 2020. Third, the repeated measures GLM captured regional differences, while the mixed ANOVA provided statistical depth in comparing Greece with the average of the rest of the EU. The analysis remains limited to aggregate-level data and does not fully capture intra-country variations or regional disparities. Therefore, future research could expand on these limitations by incorporating more granular, regional-level analyses within member states. The integration of non-monetary valuation techniques might also show interesting results, even though they contain other similar limitations. Additionally, applying advanced econometric methods could help capture dynamic interactions between the three forms of capital; for example, convergence analysis might be a useful policymaking tool for the IWI in Europe or other geographical contexts.

To recapitulate, decision-making should include both economic and non-monetary valuation methods that reflect identity and cultural attachment to nature. Community-led conservation efforts, educational programmes to foster nature-connectedness, and alignment with EU strategies can further support inclusive, sustainable environmental management. Ultimately, this study demonstrates that the IWI offers a richer and more nuanced understanding of sustainable development than GDP, revealing both differences in capital stocks and structural divergences with profound implications for long-term development, resilience, and intergenerational equity.