As a measurement of prosperity, the Legatum Prosperity Index is unique. It gives a far truer picture of the life chances for the world’s population and the performance of nations than any index of GDP alone could hope to.
True prosperity is as much about well-being as wealth and Canada, which ranks 5th in the Index in 2016, is a model for delivering this.
The 2016 Legatum Prosperity Index ranks nations over nine areas of potential success or failure: economic quality, business environment, governance, education, health, safety and security, personal freedom, social capital and the natural environment.
The 10th Legatum Prosperity Index (www.prosperity.com) covers 149 countries, and is published by the Legatum Institute, an international think tank based in London. Its focus is on understanding, measuring, and explaining the journey from poverty to prosperity for individuals, communities, and nations.
Why are some countries poorer, but prosperous? The Index shows how much prosperity a country delivers given its wealth. Here, too, Canada is in the global top five, ranking 4th.
The top performing countries: New Zealand, Finland, the UK, Canada, and Australia, have in common open markets, high levels of personal freedom, and strong civil society.
Canada’s strong ability to turn its wealth into prosperity means that it ranks above 16 other countries who have greater wealth at their disposal, including the United States and Australia.
Canada, the Commonwealth prosperity model. Alongside developed Commonwealth allies Australia, the UK and New Zealand, Canada shares the most effective model of prosperity in the world.
This bloc has proved over the past decade more successful at turning wealth into prosperity, and more prosperous, than any other comparable bloc in the world, including the Nordics and Western Europe. Open markets, high levels of freedom, and strong society are the reason.
Why is prosperity in Canada not rising as fast as in other countries?
Canada is a consistent prosperity performer, sitting in the top five for eight of the past ten years. Much of its prosperity is structural, including those outlined above.
However, prosperity has not been rising as fast as in peer countries. Prosperity growth in Canada since 2007 has been less than half that of the UK and New Zealand. This is because in some areas, notably economic quality, health and education, Canada’s competitive edge is slipping.
Unless efforts are made to improve performance here, the sustainability of Canada’s high rank position may be in question.
Countries that have not invested in the foundations of prosperity growth see that prosperity at risk.
Latin America is the only region in the world that has failed, as a whole, to invest. As a result, its prosperity is highly dependent on economic growth. With commodities-backed growth slowing, this prosperity is at serious risk, and in some cases, already falling.
The countries that have made the most significant progress have invested in the foundations of prosperity, many on the developed Commonwealth model of free markets, free people, and strong society.
Indonesia, one of the biggest risers in the Prosperity Index over the past decade, has seen improving freedoms and a rapidly strengthening society.
The risks are not confined to those yet to see high levels of prosperity.
The Index sees US prosperity stagnate, despite rising wealth. While Canadian prosperity has not growth as fast as some, that it has avoided the fate of its neighbour is to be noted.
Canada, however, is not immune to the problems in Latin America. In many ways, it faces a similar challenge in keeping its prosperity rising, with oil producing provinces likely to be hit in their creation of prosperity by falling oil prices in a way that oil-consuming provinces will not be.
Other key findings from the report include:
• The Commonwealth Effect: The Commonwealth delivers greater prosperity, and greater prosperity given its wealth, than the global average. We see the developed Commonwealth “Anglosphere” bloc of New Zealand, Australia, Canada and the United Kingdom deliver greater prosperity than any comparable bloc, including the Nordic area and Western Europe. In Africa, Commonwealth members together out-perform the sub-Saharan average in every sub-index.
• China and India have contributed most to global prosperity growth over the past decade.
• Global prosperity inequality is falling, as countries at the bottom of the Index improve their prosperity faster than those at the top.
Baroness Stroud, CEO of the Legatum Institute, said: “The Prosperity Index is the clearest lens with which to see the world as it is. Senator Robert Kennedy was right when he said, ‘GDP measures everything, except that which makes life worthwhile’. True prosperity encompasses what makes life worthwhile. It is as much about social well-being as it is about economic wellbeing.
“If people across the world are to make the journey from poverty to prosperity, the Legatum Prosperity Index not only shows how it can be done and which countries are doing it, but also highlights which countries, rich or poor, are failing to offer their citizens the life chances everybody needs in order to flourish and why.”
“Canada, alongside its developed Commonwealth peers, is a real model for achieving prosperity – each country has to follow their own path way but the principles that have pushed these countries to the top of the Index can be followed elsewhere in the world, indeed they should be,” said Alexandra Mousavizadeh, Director of Indices at Legatum Institute.
“There is still space for Canada’s prosperity to grow, particularly in Health and Education,” she said.