SPECIAL REPORT: The World Is More Prosperous Than It Has Ever Been (See how)

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From a report by the Legatum Institute

Prosperity entails much more than wealth: It reaches beyond the financial into the political, the judicial, and the well-being and character of a nation – it is about creating an environment where a person is able to reach their full potential. A nation is prosperous when it has effective institutions, an open economy, and empowered people who are healthy, educated, and safe.

The Legatum Institute’s 2019 Prosperity Index quantifies prosperity in 167 countries across the globe, which together contain 99.4% of the world’s population. Almost 300 country-level indicators, grouped into 65 policy-focused elements, are used to measure the current state of prosperity in these countries and how it has changed since 2007.

The Index builds country scores on the following pillars; Safety & Security, Personal Freedom, Governance, Social Capital, Investment Environment, Enterprise Conditions, Market Access & Infrastructure, Economic Quality, Living Conditions, Health, Education, and Natural Environment.

Using the Prosperity Index framework, nations around the world can assess their strengths and weaknesses in order to determine the economic and strategic choices that need to be made to further build inclusive societies, open economies, and empowered people to drive greater levels of prosperity.

The key findings from this year’s report are:

  • Global prosperity continues to improve, but the gap between the strongest and weakest-performing countries continues to widen
  • The improvement in global prosperity has been driven by more open economies and improvements in people’s lived experiences
  • Economies are more open due to the improvement in the investment environment and digital connectivity, as well as a reduction in administrative burdens
  • People’s lived experiences have improved due to better health, education, and living conditions
  • Stagnating institutions are holding back further improvements to global prosperity
  • People are more tolerant, although there is less freedom to speak, associate, and assemble

continues to improve, but the gap between the strongest and weakest-performing countries continues to widen

Overall, the world is more prosperous than it has ever been. Of the 167 countries measured and tracked for prosperity in this year’s index, 148 (containing 88% of the world’s population) have seen an improvement in their prosperity since 2009.

Each of the seven world regions contributed to the rise in global prosperity. The Asia-Pacific region saw the greatest improvement and accounts for most of the global increase. The region has seen the greatest improvement in 8 of the 12 pillars of prosperity over the past decade, including in all four of the economic pillars.

Not all nations contributed to the rise in global prosperity, with 19 countries experiencing a deterioration over the past decade, of these 19 countries, 15 are in sub-Saharan Africa or the Middle East and North Africa.

The gap in prosperity between those countries ranking at the top of the Index and those ranking at the bottom is growing wider.

The improvement in global prosperity has been driven by more open economies and improvements in people’s lived experiences

The rise in global prosperity over the past decade has been partly driven by more open economies, with 146 countries having seen an aggregate improvement across three of the four pillars within the Open Economies domain: Enterprise Conditions, Investment Environment, and Market Access and Infrastructure.

The quality of people’s lived experience has improved since 2009 and has also contributed to the improvement in global prosperity, with 160 countries seeing an aggregate improvement across health, education, and living conditions since 2009.

Economies are more open due to the improvement in the investment environment and digital connectivity, as well as a reduction in administrative burdens

It is now easier to start and expand a business than it was a decade ago and tax processes, including when tax payments need to be made, have been simplified for businesses. These changes have led to improved enterprise conditions. In addition, the global investment environment is more attractive than it was 10 years ago, due to strengthened property rights, investor protections, and contract enforcement. Internet usage has also more than doubled, with the number of internet subscriptions in 2019 over two and a half times that in 2009, and internet bandwidth is nearly six times 2009 levels. These improvements have strengthened market access and infrastructure.

However, this improvement in the openness of economies has not fully translated into increased economic output. Globally, average GDP per capita growth has slowed from 6% in 2009 to 3.5%, gross savings have declined and government debt-to-GDP ratio has increased from 52% in 2009 to 62%. Consequently, the Economic Quality pillar has improved only marginally over the past decade, with 96 countries improving.

People’s lived experiences have improved due to better health, education, and living conditions

Better healthcare systems and health outcomes are driving improvements in health. Changes in the tertiary education sector and the adult population becoming more educated than it was a decade ago have led to improvements in education. Reductions in poverty rates across the globe, with millions of people having been lifted out of poverty, have led to greater personal financial security and increased access to basic services, such as water, sanitation, and electricity, which have led to better living conditions, although somewhat independently of other aspects of prosperity.

Although people’s lived experience has improved, the natural environment has changed little over the past decade. While living conditions, health, and education have improved in all but seven countries, over the past decade, nearly a third of all countries (51) have seen a deterioration in their natural environment.

Stagnating institutions are holding back further improvements to global prosperity

Personal freedom has deteriorated over the last decade, with all regions other than Western Europe and Latin America and the Caribbean weakening. The quality of governance has declined, with regions such as sub-Saharan Africa and the Middle East and North Africa experiencing acute deterioration. Over the first eight years of the past decade the world saw a steady deterioration in safety and security, due to new conflicts arising in a number of countries, particularly in the sub-Saharan Africa and Middle East and North Africa regions, and also as a result of increased terrorist activity. However, the past two years have brought a reduction in politically-related terror and violence and a slight reduction in terrorist activity, leading to an improvement in safety and security since 2017.

The Social Capital pillar is the only pillar within the Inclusive Societies domain that has improved over the past decade. In particular, social networks have strengthened, as has trust in institutions, such as the police force, the judiciary, and the military.

People are more tolerant, although there is less freedom to speak, associate, and assemble

People have become more tolerant of other groups in society, particularly of the LGBT community, with residents of 111 countries expressing more tolerance than they did a decade previously. The freedom to speak, assemble and associate, however, has become more restricted across the globe over the past 10 years, with 122 countries seeing a deterioration. Contrary to the overall global decline in personal freedom, some countries are bucking the trend.

Conclusion

Eighty-nine per cent of countries are experiencing higher levels of prosperity than they did a decade ago, with all regions contributing to the improvement in global prosperity. Economies have become more open over the past decade, although Economic Quality has not improved to the same extent as the other economic pillars. Furthermore, living conditions, education, and health are at their highest ever levels and are also contributing to the rise in global prosperity.

It is encouraging to see the improvement in safety and security over the past two years after eight years of decline, even though this restoration of peace and stability is still nascent. It is also encouraging to see the rise in social tolerance as people become more accepting of other groups in society. It is, however, concerning to see personal freedoms and governance deteriorating. Given the important role institutions play in underpinning not only economic quality but also people’s lived experiences, it is imperative that countries reverse this global trend.

Although the rise in social capital is partially counterbalancing the failings of institutions, much more needs to be done to address the deteriorations in personal freedom and governance, to further build inclusive societies, open economies, and empowered people and drive greater levels of prosperity around the world.

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