Mapping prosperity: Trends in 2013
Tuesday 5, November 2013
Despite the tumultuous events of the last five years, global prosperity is actually still on the rise. Norway leads the world in 2013 on a list of top performing countries while the United States and the United Kingdom economies decline and, for the first time, Bangladesh has overtaken India in the rankings.
These are the key findings of the latest Legatum Prosperity Index, an assessment of prosperity across the globe based alongside measurements of wellbeing and life satisfaction.
Norway leads the overall rankings for the fifth year and is joined in the top ten by Switzerland (2nd), Canada (3rd), Sweden (4th), New Zealand (5th) and Denmark (6th). The US (11th) and UK (16th) are both facing economic decline, dropping four and two places respectively for their performance.
Now in its seventh year, the Legatum Prosperity Index benchmarks 142 countries around the world in eight distinct sub-indices: Economy; Education; Entrepreneurship & Opportunity; Governance; Health; Personal Freedom: Safety& Security and Social Capital.
The United States is no longer one of the twenty most economically prosperous countries in the world as some Asian, Middle Eastern and European nations overtake the former pacesetter. This is attributed to a combination of factors. Americans are experiencing higher unemployment rates than citizens in rising nations such as Taiwan and South Korea. The US is also exporting lower levels of high-tech products compared to Malaysia, China and South Korea. As a result Americans are saving less than in these nations and a decreasing proportion of the population is satisfied with its standard of living. Reported levels of access to adequate food and shelter are also declining, falling from 87 to 81 per cent since 2009. These challenges are reflected in citizens’ level of confidence in the government which has fallen consistently since 2010, from 51 per cent to 35 per cent.
Latin America is on the up and up as the US declines. On average Latin America has seen a rise in seven sub-indices since 2009, translating into a growth in overall prosperity for the sub-region. Canada leads the rankings for the region while the US remains outside the top ten.
Jeffrey Gedmin, President and CEO of the Legatum Institute, said: “This year’s index shows that Americans are suffering increasing hardship as a result of the country’s economic condition and their faith in the current administration is waning. The government must take action – or face the prospect of losing its coveted superpower status and falling even further in the eyes of citizens.”
While the UK government fights to get the economy back on track, the country has fallen down the global prosperity rankings for the first time since the financial crash five years ago. The 2013 Legatum Prosperity Index reveals that the UK is now the 16th most prosperous nation in the world, a fall of three places in just one year, with Austria, Iceland and Germany all leapfrogging the country. Since last year, the UK has experienced a drop in six of the eight categories that the Index benchmarks against, including Economy, Governance and Personal Freedom.
European nations, particularly in Scandinavia, continue to dominate the world’s top thirty all ranking highly. The two speed trend continues with ex-communist nations spurred by strong growth in prosperity. Germany (14th) has recorded the highest increase in overall prosperity in Europe since 2009. The majority of European countries are becoming more prosperous with ex-communist nations Slovenia (24th), Czech Republic (29th, Estonia (36th) and Slovakia (38th) all experiencing significant increases in prosperity.
According to the Legatum Prosperity Index the Asia Pacific region’s economic strength turbo-charges prosperity. Since 2009, four Asian countries have risen into the top 20 on the Economy sub-index: China (7th), Thailand (12th), Taiwan (16th) and South Korea (19th). By contrast, five European countries have dropped out: France (22nd), Denmark (23rd), Belgium (25th), Finland (26th0 AND Ireland (33rd). The contrasting fortunes of these two groups point to a gradual change in the global economic landscape. The four Asian nations are outperforming the European nations on all but three of the economic variables: capital per worker, satisfaction with living standards, and access to adequate food and shelter. The report notes that it is not surprising that many of the most developed regions in the world – such as Europe and North America – recorded far smaller increases over the period between 2009 and 2013, suggesting that achieving higher levels of prosperity becomes increasingly difficult as development progresses.
Development in India and Bangladesh
The 2013 Legatum Index devotes a section to contrasting trends in India and Bangladesh. The latter is leading the way in terms of development in South Asia, exposing the failings of its giant neighbor. A closer look at India and its South Asian neighbors provides an interesting case study in progress and development, one which suggests that developments can occur in the absence of rapid economic growth. This year, for the first time, Bangladesh has overtaken India in the Prosperity Index. The country is now ranked 103rd (and rising), while India is (106th) (and falling).
For Bangladesh, surpassing India is quite an accomplishment considering that the country’s GNI per capita – at purchasing per parity – amounts to just half that of its larger neighbor. The Prosperity Index reveals that despite this Bangladeshis not only live 3.5 years longer than their Indian counterparts, but fewer are undernourished, a lower number die in infancy, and a higher proportion have access to sanitation.
India’s experience suggests that GDP growth, in itself, is not enough. Between 1995 and 2012, India’s economy grew each year, on average, by 1.2% more than Bangladesh’s (5.6% compared to 6.8%) and this occurred despite India’s recent slowdown. India’s slide down the Governance rankings has been, in part, the result of falling confidence in the national government. Pakistan remains low in the rankings (132nd) with progress hampered by security-related challenges.
Middle East, North Africa and Sub-Saharan Africa
Poor governance is seen as holding back prosperity in the region. Falling Governance scores and challenges to Personal Freedom are limiting prosperity in a significant number of countries. Unsurprisingly, Syria (122nd) and Egypt (108th) have slipped down the rankings and elsewhere even the highest ranking Sub-Saharan African nations – Botswana (72nd), South Africa (77nd) and Namibia (93rd) – have all declined.
Jeffrey Gedmin, President and CEO of the Legatum Institute, said: “Since the inaugural Legatum Prosperity Index, the world has seen a continuous increase in prosperity with citizens in many countries experiencing improving wealth and wellbeing.
“But we cannot afford to be complacent. Issues of war, governance and personal freedom continue to dog the Middle East and parts of Africa. Leading nations are not exempt, with the US and UK experiencing poor performance in the rankings in recent years.”
Based in London, the Legatum Institute is an independent and non-partisan public policy organization dedicated to covering political and economic transitions around the world. Its declared mission is to provide an opportunity to step back from the twists and turns of specific circumstances and, instead, consider the general direction of travel. Despite the rises and falls of individual countries, this year’s Legatum Prosperity Index reveals that global prosperity has risen over the past five years, largely due to improvements in entrepreneurship, health and education.
However, analysts note that the benchmarks used in the Legatum Prosperity Index do not include income inequality which other research shows is increasing around the world and is threatening the stability of economies both nationally and internationally. It is suggested that this indicator should be included in future surveys.
For full rankings and other details, visit: www.prosperity.com
More and more travellers think that researching and planning a European city break is half the fun and they're not interested in pre-arranged trips or escorted tours. Self-guided tours offer a lot of advantages but require some guidance and good resources.
With the recent wild fires, disrupting flights and increasing air pollution, environmental quality is a growing factor in attracting tourists.
The hotel price comparison site www.trivago.co.uk has put together a list of the fifteen most spectacular hotel rooftop terraces in the world.