The Growth of Prosperity: Key Findings From the 2018 Legatum Prosperity Index
What is prosperity? For many, prosperity is defined by material wealth. National prosperity is too often determined by the country’s gross domestic product (GDP) or the average income per person (GDP per capita).
The issue with such as a traditional measure of prosperity is that it is not indicative of the people’s quality of life. Prosperity is multidimensional in that it extends far beyond the confines of material wealth measures. It is a complex blend of factors such as income and wellbeing.
For the Legatum Institute, a London-based think-tank, prosperity must be holistically defined through a set of estimation methods. It is through this framework that The Legatum Institute produces its perennial Prosperity Index.
The Legatum Prosperity Index
Now in its twelfth year, the 2018 Legatum Prosperity Index takes a holistic view in measuring national prosperity. The first global index of its kind, the Prosperity Index is an ongoing inquiry on the conditions required for prosperity through a combination of nine indices.
These nine indicators, or “pillars,” as they are called, are the following:
- Economic Quality
- Business Environment
- Personal Freedom
- Social Capital
- Safety and Security
- Natural Environment
The index measures these pillars across 149 countries. These countries are then further measured across seven global regions, i.e. North America, Western Europe, Latin America and the Caribbean, Eastern Europe, Asia-Pacific, MENA, and Sub-Saharan Africa. This covers 96 percent of the world’s population and 99 percent of the global GDP.
Each of these fundamental pillars examines different dimensions of society, from the political to cultural and even geographical context. Through these dimensions, the Prosperity Index aims to explore the pathways to prosperity and how countries can use these pathways to garner national success.
The Prosperity Index also encourages conversation. It enables leaders, policymakers, scholars, and the interested public an empirical platform to engage in thought-provoking, holistic conversations regarding national prosperity
From a specific vantage point, Legatum’s Prosperity Index is a tool for nations to better understand how to drive economic growth and influence the happiness and wellbeing of their respective citizens.
Summary of 2018 Prosperity Index Key Findings
The Legatum Institute’s global assessment of wealth and wellbeing in its most recent iteration of the Prosperity Index paints a positive picture. According to their findings, global prosperity is at an all-time high.
Global prosperity’s continued rise has seen over 110 countries improve their overall prosperity score. With prosperity directly correlated to people’s wellbeing, more citizens have reported their personal conditions to improve significantly.
The strengthening of global prosperity has seen large improvements across fundamental pillars on the Prosperity Index. Business Environment, Natural Environment, Economic Quality, Personal Freedom, and Governance have all seen significant upticks.
These improvements have increased accessibility for citizens looking to start businesses, equal gender representation in national legislatures, and has seen a great decline in absolute poverty.
In the current climate of the global migration crisis, where insecurity has a wide impact on human cost and suffering, these improvements demonstrate how pathways to prosperity present massive opportunities for greater wellbeing and overall happiness.
But while there is a consistent story of greater, globalized prosperity, there are also sources of uncertainty and which present significant challenges.
Despite the continued rise of global prosperity, the celebrated wealth is not shared equally. If global prosperity is at an all-time high, then the gap between the most and least prosperous nations is at the largest it has ever been as well.
This widening gap can be attributed to the global migration crisis. From the perspective of the Prosperity Index, the global migration crisis is a factor of the decline seen in Safety and Security in regions such as MENA and Sub-Saharan Africa.
Further challenges within improving both the Education and Social Capital pillars across different regions also contribute to the current divergence experienced in global prosperity.
The only way pathways to prosperity can be discovered by nations in the bottom rungs of the index is through improvements in pillars such as Safety and Security, Social Capital, and Personal Freedom. When these pillars are strengthened and protected, only then can unsuccessful nations establish true prosperity.
Realizing True Prosperity
Today’s global landscape is more interconnected than ever. Significant opportunities and challenges occurring in one country can have wider implications beyond its borders. Such implications mean a multi-dimensional approach to prosperity is required.
The Prosperity Index’s comparative data shows that a clear progression in key pillars contributes to a significant rise in prosperity.
When nations discover pathways to prosperity beyond material wealth, long-term gains can be experienced. Withstanding external threats and economic shocks are only possible when nations are able to sustain improvements across all nine Prosperity Index pillars.