Tied for 14th in prosperity

So says the Legatum Prosperity Index.  “The what?” you ask.

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

Certainly a rather admirable goal.  So why is Norway 14th?  Don’t they know the Nordic countries are supposed to dominate on these type rankings?

The report has two main drivers for prosperity: comparative livability and economic competitiveness.  From the report:

In general, the Nordic countries (Denmark,
Sweden and Norway) achieve top scores in the
drivers of life satisfaction (and indeed, Denmark
currently rates as the “world’s happiest country”
– see the callout, Prosperity Performance on
page 10). These Nordic countries are rich, highly
democratic, scrupulously incorrupt, extremely
healthy, enjoy vibrant community life, and their
citizens have great personal and political freedom
to make choices in determining the course of
their own lives. No other region can match the
Nordic performance in all of these indicators of
liveability.

This all seems pretty true (although perhaps the scrupulously in front of incorrupt could be dropped).

However, at the same time, the Nordic countries
lack economic vibrancy. They therefore score
relatively poorly on our Index of Economic
Competitiveness. The Nordics are capital-rich –
particularly Norway, enjoying a boom in oil wealth
– and have excellent standards of education. But
the Nordic countries score relatively poorly on
indicators of innovation, competition in domestic
markets, and particularly, on entrepreneurship.
Relatively few citizens in these countries choose
to go into business for themselves. This lack of
entrepreneurial flair suggests the Nordic countries
may not be taking full advantage of their citizens’
individual potential, and may also warn of
potential constraints on future growth (see the
callout, Supporting New Research on page 20).

So, to summarize.  Life is good.  People aren’t particular entrepreneurial.  The latter may cause the former to change in the years ahead. 

Two other disjointed thoughts:

  • The United States finished tied for 4th.  (Wonder how the recent financial crisis will impact economic competitiveness on next year’s version….)
  • The authors of the report must have exhausted the selection of stock photographs tagged “happy.” 

(Hat tip: Daniel Drezner)

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