Global Prosperity Index 2012

[Jackmoves]

Quite an interest read(with charts and graphs) for those of you who are into shit like this, released a couple of days ago. I have copy pasted bits of it, but here is the report as a pdf, for an individual fact sheet on your country check their website.
http://www.prosperity.com/Content/Do..._Final_Web.pdf

Prosperity extends beyond just material wealth. It includes factors such as social capital, effective governance, human rights and liberties, health, opportunity, security, and overall quality of life. The purpose of the Prosperity Index is to spark debate and to encourage policymakers, scholars, the media, and the interested public to take an holistic view of prosperity and to better understand how it is created.

Published in connection to this report is a full methodology document and 142 individual country fact sheets.
These are available in print and on our website www.prosperity.com.

Dear Reader,
Recently, there has been a global shift in the understanding of how to measure national success. From former French President Nicolas Sarkozy’s 2009 Commission, to the King of Bhutan’s Index of Gross National Happiness, to David Cameron’s initiative to measure wellbeing in the UK: the world is beginning to take a broader view of success. We welcome this shift in our understanding of why countries prosper.

We believe that the Legatum Institute is contributing to this debate. For the past six years the Legatum Prosperity Index™ has been exploring the foundations of national success by combining traditional measures of material wealth with subjective wellbeing. This holistic view of prosperity, that moves beyond GDP, allows us to paint a more complete picture of the world.

The Legatum Prosperity Index™ incorporates traditional economic measures of prosperity with measurements of wellbeing and life satisfaction. Indeed, it remains the only global index to provide an empirical basis for the intuitive sense that true prosperity is a complex blend of income and wellbeing. In order to better understand the role of wellbeing in public policy, the Legatum Institute has recently launched a Commission on Wellbeing to be chaired by former Cabinet Secretary Lord (Gus) O’Donnell. The independent, non-partisan Commission will report on the strengths and limitations of wellbeing analysis, tying latest research findings to the everyday practical needs of citizens.

Each country must chart its own course to success. No matter the circumstance, however, the Prosperity Index confirms that key drivers of national prosperity include entrepreneurship and opportunity, effective accountable government, and the rule of law.

The Prosperity Index is central to the Legatum Institute’s on-going inquiry into the foundations of national success. I hope that you find the 2012 edition stimulating and engaging.

Dr Jeffrey Gedmin
President and CEO, Legatum Institute

Top 10 (Economy - Entrepreneurship & Opporunity - Governance - Education - Health - Safety & Security - Personal Freedom - Social Capital)

Norway
Denmark
Sweden
Australia
New Zealand
Canada
Finland
Netherlands
Switzerland
Ireland

SUBINDEX PERFORMERS: BEST AND WORST
This graphic shows the countries that rank highest
(first) and lowest (142nd) in each of the eight sub-indices.

Best ->Worst
Economy: Switzerland - Zimbabwe
E&O*: Denmark - Congo
Governance: Switzerland - Zimbabwe
Education: New Zealand - Central African Rep
Health: Luxembourg - Congo
Safety & Security: Iceland - Chad
Personal Freedom: Canada - Yemen
Social Capital: Norway - Togo

*Entrepreneurship & Opportunity

REGIONAL ANALYSIS: THE AMERICAS
Canada leads the region placing sixth, while the US falls out of the top ten for the first time since 2009, placing 12th overall.

The US has seen a decline in rankings in most sub-indices. The Economy and Entrepreneurship & Opportunity sub-indices have declined the most with the US falling seven places and eight places respectively in each in the last four years. This is due to a decline in citizens’ perception that working hard gets you ahead, a decline in high-tech and telecommunication exports, and an increase in levels of unemployment. Furthermore, US citizens’ overall satisfaction with living standards has declined since last year. Although the US ranks second overall in the Health sub-index, the country’s infant mortality rate is higher than that of Europe (6.5% compared to a European average of 3%).

Uruguay has replaced Costa Rica as the Latin American regional leader and is followed by Chile. Bolivia used to be the worst regional performer, but has now overtaken both Guatemala and Honduras. At the very bottom of the regional rankings, Haiti—a new entrant in the 2012 Index—places 138th.

When comparing the region with the rest of the world, we observe that most countries in the Latin American region fall below the global average in the Governance, Safety & Security, and Social Capital sub-indices (represented in the graphic below). Whereas, most countries in the region place above the global average for Personal Freedom.

REGIONAL ANALYSIS: EUROPE
The performance of European countries in the 2012 Index is varied, reflecting institutional, economic, and political differences among them.

In the overall rankings, most Western European countries rank in
the top 30 (with the exception of Greece and Italy), while Central
and Eastern European countries rank in the middle of the Index
(with the exception of the Czech Republic and Slovenia who place
in the top 30).

Although this distinction within the region suggests the existence
of ‘two Europes’, the same distinction is harder to make when
analysing the Economy sub-index, where the majority of European
countries have seen their scores drop since 2009.

A change in the Economy sub-index does not merely reflect
changes in GDP. It reflects the health of the overall economy
coupled with citizens’ satisfaction and expectations of the economy.

The graphic (right) captures the movements of European
countries’ scores in the Economy sub-index since 2009. Among
the countries with the largest decreases in score are Greece, Spain,
Iceland, and Lithuania. The decline in the Economy sub-index is
more pronounced in Western European countries, which saw an
average decline twice as large as that in Eastern Europe.

Perhaps surprisingly, some of the stronger European economies
such as Norway, Denmark and Finland, are also declining. Overall,
the drop in the Economy sub-index is led by objective variables
such as increases in non-performing loans and in employment.

REGIONAL ANALYSIS: SUBSAHARAN AFRICA
Among the 30 lowest ranking countries in the Index, 24 are in sub-Saharan Africa. The highest ranking sub-Saharan African country is Botswana (70th), followed by South Africa (74th) and Namibia (83rd). The 2012 Index includes 16 new sub-Saharan African countries, all of whom rank among the bottom 40 of the Index.

Many African countries perform best in the Social Capital sub-index, including Zambia, Sudan, Uganda, Mali and Tanzania, who rank among the top 60 countries, in this sub-index overall.

The role of social capital in a developing country is complex. For example, when social capital is high, and citizens are able to rely heavily on networks and connections, it can be a symptom of failing institutions. In other words, when institutions are weak and cannot deliver public goods, networks and social ties provide an alternative that facilitates collective actions.

Instead, when strong institutions are in place, the role of the state in delivering public goods and services is best accomplished when combined with social trust and community participation.

The link between Governance and Social Capital is seen in the graph (below) where we observe countries such as Zimbabwe, Chad, Sudan, and Liberia ranking low on Governance, but high on Social Capital.

REGIONAL ANALYSIS: MIDDLE EAST AND NORTH AFRICA
Middle East and North Africa (MENA) countries span the Index rankings. The United Arab Emirates, for example, ranks in the top 30 overall, whilst Iraq and Afghanistan—two new countries in the Index this year—rank within the bottom 15 countries in the Index.

Despite differences across the region, most countries have improved their performance in the Entrepreneurship & Opportunity (E&O) sub-index over the last three years (see graph). This parallels a global improvement in the E&O sub-index in recent years, which has been caused, in part, by increasing levels of communications technology such as mobile banking. This has allowed more aspiring entrepreneurs to launch their own businesses. The MENA region has
seen the second largest improvement in this sub-index behind Asia.

Alongside greater connectivity, improvements in the E&O sub-index (represented by the purple lines in the graphic, right) are partly due to a decrease in business start-up costs. Start-up costs have decreased throughout the region with the exceptions of Israel, Algeria, and Yemen, where they remain mostly unchanged. A significant improvement has been experienced by Egypt where business start-up costs decreased from almost 16% of GNI per capita in 2009 to 6% in 2012.

REGIONAL ANALYSIS: ASIAPACIFIC
The Asia-Pacific region includes 28 countries whose rankings span from the top ten (Australia and New Zealand) to Pakistan. The so-called ‘Asian Tigers’ along with Japan all rank within the top 30 of the Index.

China has remained relatively stable since last year, ranking
55th overall in 2012. China’s economic performance is strong,
placing fifth in the regional Economy rankings and 11th in the
global Economy. Its performance in the Safety & Security and
Personal Freedom sub-indices, however, remains overall very
low ranking 101st and 128th, respectively.

India has experienced a drop in prosperity since 2009, partly
due to a decrease in its Governance score. Despite this drop,
the Governance sub-index remains India’s highest ranking
sub-index (49th). India’s lowest ranking sub-indices ar e
Safety & Security (114th) and Social Capital (138th).

Of all the global trends that have sparked discourse and
debate in recent years, perhaps the most significant is
the rise of the new economic powers in the East. This is
reflected in the Economy sub-index where we observe
improvements in most Asian countries since 2009.

The significant drop in Japan’s Economy ranking (see
graphic) is mainly due to a sustained decrease in foreign
direct investment (FDI) inflows, as well as the negative
effects on the investment climate of the TOhoku earthquake
and tsunami. Japan went from ranking second to sixth in
the region, having been overtaken by China, Hong Kong,
Australia, and Taiwan. Pakistan has experienced the largest
drop, now ranking last in the Economy sub-index, regionally.
New Zealand fell from sixth to 10th in the region, resulting
from rising unemployment and inflation coupled with a
decrease in citizen’s satisfaction with the economy.

[Tradewind]

Suck it Finland, you lose again!

[muto]

If guns or ammo had more restrictions to own them here in the U.S., our safety and security numbers would be far better, and if we didn't spend trillions on our military, pointless wars, and government handouts, our economy would surely be better too.

[Jackmoves]

Suck it Finland, you lose again!

hehe, the most interesting bit to me is their take on social capital. page 26

… THE CURIOUS EFFECT OF SOCIAL CAPITAL ON ECONOMIC REGULATION

Social capital is one of the most important components of prosperity. The term ‘social capital’ encompasses factors such as social cohesion and engagement, as well as community and family networks.1 In every region of the world, social capital correlates negatively with government regulation.

Does excessive regulation decrease social capital or do high
levels of social capital lead to low levels of regulation?
Research suggests that the causal relationship follows the
latter example, with higher levels of social capital leading
to fewer but better regulations. Indeed societies that are
highly trusting—both in government institutions and in one’s
fellow citizens—tend to demand fewer, less complex and less
restrictive economic regulations.

Countries that have low levels of social capital tend to be highly regulated, and vice versa.

Consider entrepreneurship, an activity that in many economies
attracts a substantial amount of regulation. In countries where
social capital is low, the lack of trust can translate into a
belief that entrepreneurs behave in their own self-interest to
the detriment of society. Therefore, the profit-driven culture
that entrepreneurs are perceived to be promoting is seen as a
threat to society and the established ways of doing business.
In these countries, the government is often called upon to
create regulations to prevent rent-seeking behaviour, which
in turn can also result in unwanted barriers to entrepreneurial
activity, innovation, and competition.

The opposite dynamic occurs in countries where social capital
is high. Entrepreneurs in these economies are considered to
provide societal benefits and, as a result, these countries tend
to erect fewer regulatory barriers to entrepreneurial activities.
In the graphic (top right), the cost of starting a business—a
measure of a country’s level of regulatory burden—is plotted in
relation to a country’s social capital ranking.

The contrast is clear. Countries such as Denmark, Australia,
and Japan, which score highly on the Social Capital sub-index,
impose an average business start-up cost of less than 2.7% of
gross national income (GNI) per capita. The average start-up
cost in countries with below-average social capital scores is
60% of GNI per capita.

How do existing levels of regulation relate to social capital?
As shown in the second graphic (bottom right), high-income
nations that have less regulation, owing to their higher social
capital, also have more effective regulation. In this example,
the effectiveness of government regulation is measured by its
ability to formulate and implement sound policies that permit
and promote private sector growth and development.

The data clearly show that European countries that have low
levels of social capital, such as Greece, Italy, Portugal, Spain,
and France, also have low levels of regulatory effectiveness
compared with other developed Western European countries.

This raises a troubling prospect for every country in which
social cohesion, civic participation, and levels of trust are
in decline. A look at the multi-year trends in countries such
as the United States, the United Kingdom, Austria, and the
Netherlands shows a gradual drop in social capital that could
conceivably lead to calls for greater regulation.

The challenge for these countries to move forward will be not
to fall into the trap of creating more regulation as a substitute
for eroding social capital. The more effective (yet complex and
elusive) solution is finding alternatives to regulation that better
cultivate trust in institutions and between members of society.

[Wikiy]

Well, my country ranked 50. Disappointing.

[Jackmoves]

Well, my country ranked 50. Disappointing.

Depends on why though imo, you can get the fact sheet for Croatia on their site if you want more info.

[Catta]

Denmark, ja da!

[GreatOak]

I'm not surprised at all. Our healthcare and higher education quality is pretty good and government and mismanaged economy suck (for what it should be).

Wouldn't this be more relevant though? It seems like the study is mostly opinion based. Correct me if I'm wrong.

Edit: I'm just glad we beat Britain and France. Take that my eternal rivals!

[Catta]

I'm not surprised at all. Our healthcare and higher education quality is pretty good and government and mismanaged economy suck (for what it should be).

Wouldn't this be more relevant though? It seems like the study is mostly opinion based. Correct me if I'm wrong.

Edit: I'm just glad we beat Britain and France. Take that my eternal rivals!

What part makes you think its opinion based?

Also why do American give the French such flak. They helped you in your independence and gave you a huge statue of a lady with a torch.

[GreatOak]

What part makes you think its opinion based?

Also why do American give the French such flak. They helped you in your independence and gave you a huge statue of a lady with a torch.

This is due to a decline in citizens’ perception that working hard gets you ahead

Seems like it's at least partly opinion based, but I'm not contending the results. They seem rather typical. I'm satisfied with being in the top 15 as we have a huge country and a lot of things to worry about/manage. Any of the top 30 countries are great places to live.

As for the French bit, it's just friendly ribbing. We do the same thing to Canadians, but they aren't considered to be rivals. We have no reason to dislike the French. Only the dumbest among us believe in the stereotypes and take them seriously.
See this? http://www.gallup.com/poll/152735/am...al-allies.aspx

[vastx]

What part makes you think its opinion based?

Also why do American give the French such flak. They helped you in your independence and gave you a huge statue of a lady with a torch.

It seems to be a mutual give and take of flak. I don't know why.

[Catta]

It seems to be a mutual give and take of flak. I don't know why.

Well i could understand it if it was GB vs F or US vs GB but not F vs US.

[Tradewind]

Well i could understand it if it was GB vs F or US vs GB but not F vs US.

There was the whole Freedom Fries thing when France told the US to go kick rocks in Iraq.

[GreatOak]

There was the whole Freedom Fries thing when France told the US to go kick rocks in Iraq.

That wasn't a big deal at all. It was only rednecks that cared.

---------- Post added 2012-12-14 at 12:00 AM ----------

Well i could understand it if it was GB vs F or US vs GB but not F vs US.

Well GB is obviously our historical rival and now best friend, and France just has a mutual thing going with us where we insult each other, usually in jest. It also comes from the fact that aside from Japan, Canada, and maybe Australia; Americans by and large don't really know or care about any other countries. It's sad but one of the stereotypes that is widespread and true, like how we have a lot of fat people.

[Wikiy]

Depends on why though imo, you can get the fact sheet for Croatia on their site if you want more info.

I know perfectly well why, Croatians are a fucked up people. All we do is self-criticize and imagine that our situation is the worst in the world. In turn, this causes the situation to get even worse. Oh well, the social democratic party just won the elections a year ago, gay rights are being improved this year, as well as a lot of other social rights, so i guess it's not all grim.

Our GDP has been falling for 5 years now, ever since the start of the recession. The estimates are that we'll have a growth of 0-1% next year so i guess things are starting to look better. Things can't keep keep going this bad forever, after all. Another reason why it might get better is because we're entering the Union in half a year and i imagine that will generate a huge boom for our tourism (which contributes to 20% of our GDP).

The reason i said I'm disappointed is because i was simply hoping that this would be one of those indexes/rankings where Croatia ranks better than what I'd usually expect, such as this one.

[Jackmoves]

Here is the methodology, long ass read though, 76 pages.
http://webapi.prosperity.com/downloa...hodologyV4.pdf

Summery

The Prosperity Index is the only global measurement of national success based on both income and wellbeing. Our econometric analysis has identified 89 variables, which are spread across eight sub-indices. By measuring prosperity holistically we are able to identify and analyse the specific factors that contribute to the success of a country.

To build the Index we begin by looking at the current academic literature on economic growth and wellbeing. From here, we go through numerous stages of analysis and calculation before we arrive at the final Prosperity Index scores and ranks. This includes selecting the variables, standardising values, applying weightings, and more. The following step-by-step guide provides details for each of these stages…

[Wikiy]

I'm not surprised at all. Our healthcare and higher education quality is pretty good and government and mismanaged economy suck (for what it should be).

Wouldn't this be more relevant though? It seems like the study is mostly opinion based. Correct me if I'm wrong.

Edit: I'm just glad we beat Britain and France. Take that my eternal rivals!

HDI isn't totally useful, it only factors in 3 things, average life expectancy, average income and some education index. There are a lot of things besides those 3 that are relevant to prosperity.

Also, that HDI list is slightly outdated, a new report should be coming out any week now.

[Jackmoves]

I know perfectly well why, Croatians are a fucked up people. All we do is self-criticize and imagine that our situation is the worst in the world. In turn, this causes the situation to get even worse. Oh well, the social democratic party just won the elections a year ago, gay rights are being improved this year, as well as a lot of other social rights, so i guess it's not all grim.

Our GDP has been falling for 5 years now, ever since the start of the recession. The estimates are that we'll have a growth of 0-1% next year so i guess things are starting to look better. Things can't keep keep going this bad forever, after all. Another reason why it might get better is because we're entering the Union in half a year and i imagine that will generate a huge boom for our tourism (which contributes to 20% of our GDP).

The reason i said I'm disappointed is because i was simply hoping that this would be one of those indexes/rankings where Croatia ranks better than what I'd usually expect, such as this one.

Sounds like quite a few swedes you get online btw(the complaining) lol
What is Croatias main industries? I know it's a lovely country for tourists, with a beautiful coastline but not much more.

[Khoranth]

I think the USA should get bonus credit and rate number #1, since the USA has so many people from the poor performing regions of the world here, who we are trying to let be here and have a better life.

If that were factored in the USA would definitely be #1

[Tradewind]

I think the USA should get bonus credit and rate number #1, since the USA has so many people from the poor performing regions of the world here, who we are trying to let be here and have a better life.

If that were factored in the USA would definitely be #1

What is this, I don't even.