Global prosperity isn’t merely about the amount of money or possessions that a person, nation, or region has. Instead, it is about how happy their everyday existence can be and whether or not there is a chance of there being a better tomorrow.
The Legatum Institute is a London-based think-tank that is one of the leading research organizations on this subject due to its unique belief in prosperity comprising both resources and well-being. Every year, they publish an Index that analyzes countries around the world in terms of nine pillars (Economy, Entrepreneurship & Opportunity, Governance, Education, Health, Safety & Security, Personal Freedom, Social Capital, and Environment) in an effort to identify the successful ways that countries can move from poverty to prosperity.
For more than 11 years, The Legatum Institute has been tracking data from 149 countries (that make up 96% of the world’s population and 99% of the global GDP). This is to see how states and regions are moving towards or away from prosperity and the factors that are causing those moves to occur.
If you are interested in learning more, here are three important things to know about changing global prosperity.
1. Prosperity is rising globally, but not every nation is benefiting.
The good news is that around the world, prosperity is increasing on average and currently sits at a record high. According to The Legatum Prosperity Index, world prosperity is at the highest level it has been in the last decade and is now 2.6% higher than it was 10 years ago. Additionally, their report found that the growth of global prosperity was faster between 2012 to 2017 than from 2007 to 2012.
That being said, in the Index, they exhibited that while global prosperity as a whole is improving, the span between the highest and lowest country scores is also increasing, signifying that not all nations are presently benefiting from the progress. Therefore, moving forward, it is essential that adequate attention and action are given to the significant challenges that many countries and regions continue to face.
2. The global business environment plays a significant role in the rising prosperity.
More than any other area of global prosperity development, the world’s business environment has improved dramatically in the past decade. This is crucial to increasing overall global prosperity because when a nation has a robust business environment that allows for an entrepreneurial climate, new ideas and opportunities are able to be pursued. This, in turn, leads to more wealth and higher social well-being.
When it comes to measuring the strength of a Business Environment, the Legatum Prosperity Index examines five key performance indicators: Entrepreneurial Environment, Investor Protection, Business Infrastructure, Access to Credit, and Labor Market Flexibility. These indicators cover five of the most critical aspects of business, from opening and operating a firm to overcoming competition and growing within an industry.
Last year, Asia-Pacific advanced its business environment more than any other region, while Sub-Saharan Africa saw the most substantial improvement in the simplicity of starting a business. On the other hand, Eastern Europe was the single region that failed to develop in this regard.
3. With the good news, there are also some issues to consider.
Naturally, the whole world would not be improving in every aspect each year. So while there has been a significant improvement in certain areas, there is still plenty of work that needs to be done. The most notable thing is that for the vast majority of regions around the world (five out of seven), the Safety and Security pillar has observed a severe decline in score. Unfortunately, this is the only pillar that has a lower score in 2018 than it did in 2007.
This decrease in score is mainly because of the lack of security in people’s living conditions (particularly in Latin America and the Caribbean). Around the world, more and more individuals and families alike are finding themselves in a position where they are unable to afford sufficient food and shelter.
Also, the small uptick in the number of terrorist deaths has affected the Safety and Security pillar and is expected to continue transpiring — making it a long term trend to watch in this category.
What interests you about global prosperity and The Legatum Prosperity Index? What areas do you think need to be addressed more vigorously by the international community? Let us know your thoughts.
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