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How to rank country prosperity– The 2010 Legatum Prosperity Index™

Alan McCormick, CEO of the Legatum Institute presenting the 2010 Prosperity Index™ to MSFS

The Legatum Institute,  “an independent, non-partisan organisation that researches and advocates for an expansive understanding of global prosperity,” has just released its Prosperity Index™ for 2010. Georgetown University was honored today when the Institute leadership presented their Index to MSFS students, faculty, and administrators. The presentation was made by Alan McCormick, Institute CEO, Dr. Ashley Thomas Lenihan, Senior Fellow, Nathan Gamester, Research Assistant, and Jiehae Choi, Research and Program Analyst.The team provided an overview of the Index, discussed the 2010 rankings, and demonstrated the remarkable, interactive website that allows for a detailed exploration of the data.

Since any description here cannot do justice to the Index, I strongly encourage everyone to spend some time examining the Index website.  In the meantime, here are a few excepts from the website:

What is prosperity, and how is it achieved?

The Legatum Prosperity Index seeks to answer these two fundamental questions. Most people would intuitively agree that “prosperity” is not just about money but also about quality of life. The Index defines prosperity as both wealth and wellbeing, and finds that the most prosperous nations in the world are not necessarily those that have only a high GDP, but are those that also have happy, healthy, and free citizens.

And how was the Index developed? The site explains:

The Prosperity Index™ assesses 110 countries, accounting for over 90 percent of the world’s population, and is based on 89 different variables, each of which has a demonstrated effect on economic growth or on personal wellbeing. The Index consists of eight sub-indexes, each of which represents a fundamental aspect of prosperity:

  1. Economy - Stable and growing economies increase per capita income and promote the overall wellbeing of its citizens.
  2. Entrepreneurship & Opportunity (E&O) – A strong entrepreneurial climate in which citizens can pursue new ideas and opportunities for improving their lives leads to higher levels of income and wellbeing.
  3. Governance - Well-governed societies enjoy national economic growth and citizen wellbeing.
  4. Education - Education is a building block for prosperous societies.
  5. Health - A strong healthcare infrastructure in which citizens are able to enjoy good physical and mental health leads to higher levels of income and wellbeing.
  6. Safety & Security – Societies plagued by threats to national security and personal safety cannot foster growth in average levels of income or wellbeing.
  7. Personal Freedom - When citizens enjoy their rights to expression, belief, organisation, and personal autonomy in a society welcoming of diversity, their country enjoys higher levels of income and social wellbeing.
  8. Social Capital - Social networks and the cohesion that a society experiences when people trust one another have a direct effect on the prosperity of a country.

Each of the sub-indexes provides us with two important analyses: first, an economic assessment, and second, an assessment of a country’s subjective wellbeing, or happiness.

A summary of the complete Rankings can be found here. A Wall Street Journal review of the Index provides this chart:

While I have not yet had an opportunity to fully explore all the data, it seems clear to me that the Index will be exceptionally useful to both the policy and academic communities. Kudos to the Legatum Institute for creating this outstanding resource!

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Anthony Clark Arend is Professor of Government and Foreign Service at Georgetown University and the Director of the Master of Science in Foreign Service in the Walsh School of Foreign Service.

Commentary and analysis at the intersection of international law and politics.