What true prosperity is, and how it can be realised, are fundamental questions that must be answered by every country. Over 11 years, the Legatum Prosperity IndexTM has evaluated long-term changes in global prosperity, pinpointing some of the drivers of progress and highlighting those nations that have made the greatest strides forward. Prosperity: growing unequally As our Index shows, prosperity has been growing around the world. This seems remarkable, given our present turbulent times. We have seen the rise of terrorism, through groups such
as Islamic State and Boko Haram. A vast number of people have left their homes in the Middle East and Northern Africa, risking their lives to travel through war zones and across oceans for a highly uncertain future in Europe – in effect, seeking their own personal pathway from poverty to prosperity. We have also seen populist movements gain strength, leading to the election of Donald Trump, and the success of populist parties in Germany, the Netherlands and Hungary. Despite these developments, global prosperity now sits at its highest level since the Index was first published in 2007. More countries experienced growing prosperity (88) than falling (61) in the last year, with the greatest increases coming in the Asia-Pacific region. The most important driver of this improved prosperity over the last 11 years is the significant strengthening of the world’s Business Environment, one of the nine pillars of
the Index . (More information on the nine pillars can be found on page 10.)
Growth in prosperity has been unequal, however. The gap between the top and bottom scorers in the Index has been
growing for five straight years; and the lowest score in the Index (held by Yemen this year) has not been so low for eight years. Some declines in prosperity are very concentrated, such as those being seen in Latin America – most notably in Venezuela, but also in Nicaragua, Ecuador and El Salvador. Furthermore, countries such as Syria are devastated by conflict, and their declining prosperity significantly affects their neighbours. Syria is among
a group of nations where accurate data collection is not possible, due to either conflict or governmental restrictions.
This resulting imbalance in prosperity threatens wellbeing as well as wealth, most notably in Safety and Security. In this pillar, the least prosperous 30 countries have now witnessed a near-continuous 10-year decline, even while the top 30 countries have seen a modest improvement. The world may find it can increase prosperity, but growth will always be muted when it cannot be shared by all. Alternative pathways to prosperity At first glance it may appear that the rankings this year broadly reflect traditional measures of wealth, with the bottom of the prosperity table populated by poorer nations which have not seen an increase in their GDP, and the top dominated by
those which have been more successful. On closer inspection, however, it becomes clear that a nation’s prosperity ranking is not determined by wealth alone; it also depends significantly on wellbeing. In fact, there are many diverse elements, with relative importance depending on culture and place, which determine the life chances and opportunities available to a nation’s citizens. In bringing together such a broad range of indicators, our
aim is to characterise the many different routes to prosperity. This is essential if we are to make meaningful comparisons in a world with distinct and equally valuable pathways to a fulfilling life. Two groups that demonstrate this truth are the Nordics and the Anglosphere. Their nations enjoy the highest overall prosperity in the world, with a representative from each at the number one spot for each of the last eleven years, held this year by Norway. Yet the Anglosphere and Nordics are successful for different reasons, as explored in our feature on page 13.
What holds countries back?
The breadth of the Prosperity Index allows it to pinpoint not only the drivers of, but also the obstacles to, a nation’s prosperity.
It allows a unique look at the specific constraints to progress, highlighting where research and policy work should be most readily focused. With this deeper perspective it becomes possible to look at nations, not just in terms of where they are now, but where they could be in the future. All people should have the opportunity to live in a country in which their wellbeing is promoted; and searching out the areas in which nations have potential to grow is a crucial part of realising this goal. The Index provides a powerful tool for identifying where the progress of
countries is held back, due to a deficit in key areas of prosperity. For example, countries in the fourth quintile (ranked 91-120) generally underperform in Personal Freedom and Governance;