THE LEGATUM PROSPERITY INDEX™ 2016

Bringing Prosperity to Life

Mind the gap!

Across the world, prosperity is delivered to a greater or lesser extent as shown by the rankings and results on this site. Some of the findings are unsurprising.

The bottom of the ranking table is populated by some of the world’s poorest countries, like the Central African Republic, while the top of the table is populated by some of the world’s richest countries, like Norway.


However, the level of prosperity delivered by a country can, using GDP per capita, be compared against the level of prosperity expected given that country’s wealth.

It is here where the countries in most need of praise can be identified, those delivering far more prosperity than you would expect given their wealth.

In the chart above, each dot represents a country. The curve shows the general tendency with which prosperity increases as GDP per capita increases. Its shape is fitted to all 149 countries covered by the Prosperity Index. If a country falls below the curve, then we can say that compared to all other countries, it is under-delivering prosperity for its citizens. That is, it has a prosperity deficit: its level of prosperity is lower than we would expect given its wealth. Likewise, if a country rises above the curve, then we can say that it is over-delivering prosperity for its citizens: it has a prosperity surplus.

More than absolute prosperity scores or rankings alone, the Prosperity Gap shows the Prosperity Index to be a tool for change. It provides leaders with the assessment they need to transform their nation into a more prosperous one and it provides citizens with the information they need to hold those leaders to account.

Explanatory Note:

The vertical axis measures a country’s Prosperity Index score. The horizontal axis measures a country’s level of GDP per capita, adjusted for purchasing power parity, and expressed in current international dollars. The fitted curve is logarithmic with a coefficient of 6.52 on logged GDP per capita, which is statistically significant at the highest level, and an overall fit of 63 percent. The curve intercepts the vertical axis at -2.22. The Prosperity Gap refers to the vertical distance from each country to the curve (the ‘residual’).

Featured countries

New Zealand
GDP per capita: $34,762
Prosperity rank: 1st
Significant prosperity surplus
New Zealand has been the best deliverer of prosperity in the world for the past ten years. So strong is its prosperity delivery, it ranks 1st in the Prosperity Index, above 26 countries with greater wealth at their disposal. Its strong social capital, high level of freedom, and open trading economy have helped keep it at the top.
United Kingdom
GDP per capita: $38,658
Prosperity rank: 10th
Significant prosperity surplus
The United Kingdom is the third best deliverer of prosperity in the world and this delivery has risen over the past decade. This is because the UK has managed to improve overall prosperity despite not growing much wealthier. This has largely been the result of radical social reform improving performance in areas like Education.
United States
GDP per capita: $52,549
Prosperity rank: 17th
Moderate surplus
While the United States continues to over-deliver prosperity, its prosperity level has stagnated over the past decade and declined relative to emerging and advanced countries alike. When delivery just among advanced economies is considered, the US under-delivers.
France
GDP per capita: $37,306
Prosperity rank: 18th
Moderate surplus
France's prosperity surplus has been consistently strong over the past decade. While the country has witnessed a collapse in Social Capital and seen recent terror attacks affect Safety & Security performance, the surplus has been maintained by rising freedom and education scores.
Italy
GDP per capita: $33,587
Prosperity rank: 32nd
Expected prosperity
Italy has seen its small surplus erased in the past ten years, as prosperity has fallen faster than wealth following the global financial crisis. The biggest declines have come in Economic Quality and Social Capital, where surpluses have been turned into equal sized deficits.
United Arab Emirates
GDP per capita: $66,102
Prosperity rank: 41st
Moderate deficit
The UAE is carrying a moderate deficit, not uncommon among oil-dependent economies. However that this deficit is noticeably shrinking is uncommon, the result of concerted efforts to move beyond oil-dependence. Over the past decade, the UAE's deficit has shrunk by 30 percent.
Qatar
GDP per capita: $135,322
Prosperity rank: 46th
Significant deficit
Qatar has the highest GDP per capita in the world ($135,321), far higher than second-richest Luxembourg ($93,552). Its inclusion in the Index alters slightly the delivery line, mildly exaggerating the surpluses of other very high income countries like Luxembourg and Singapore. Without Qatar, the prosperity surplus of Singapore falls from +1 to +0.6.
Brazil
GDP per capita: $14,455
Prosperity rank: 52nd
Expected prosperity
Brazil delivers as much prosperity as expected given its wealth. A rising surplus in Personal Freedom and shrinking deficit in Safety & Security have been offset by widening deficits in the Business Environment, Governance, and Health sub-indices.
Vietnam
GDP per capita: $5,668
Prosperity rank: 75th
Mild surplus
Vietnam has always consistently over-delivered prosperity and has the third highest prosperity surplus in Southeast Asia behind Cambodia and the Philippines. Its surplus comes mainly from its Economic Quality and Education performance.
Saudi Arabia
GDP per capita: $50,284
Prosperity rank: 85th
Significant deficit
Saudi Arabia is carrying a significant prosperity deficit, common among oil-dependent economies. This deficit has been broadly static over the past ten years. While it is positive that the Kingdom's prosperity deficit has not been increasing with its fiscal deficit, little progress has been made in turning oil wealth into broader prosperity for its citizens.
China
GDP per capita: $13,400
Prosperity rank: 90th
Moderate deficit
That prosperity growth has not kept up with China's economic rise is reflected in a widening prosperity deficit over the past decade. China's GDP per capita has nearly doubled in the past ten years, but the size of its prosperity deficit has quadrupled.
Zambia
GDP per capita: $3,626
Prosperity rank: 108th
Expected prosperity
Zambia has been broadly delivering as much prosperity as you'd expect given its wealth, carrying a small surplus for the past ten years. Progress to deliver more in areas like the Business Environment have come at the cost of Social Capital and the Natural Environment.