Key Finding

5. History is not destiny

The highly ranked nations include not only those with a long history of productive economies, effective and limited government, and social capital, but also several others which have even recently been afflicted with poverty, oppression, and unhappiness. The top 40 spots in the Index include countries that only 40 years ago had stagnant economies or dysfunctional governments, and often both. In Asia, Singapore, Taiwan, and South Korea were barely distinguishable from developing countries just a generation ago. In Europe, nations such as Croatia, Estonia, the Czech Republic, Hungary, and Slovakia were controlled by communist governments, knew little of wealth or freedom, and some, of course, did not even exist. In Latin America, Chile and Brazil were just beginning to find their way to economic growth.

INSIGHT: Nations which become prosperous do so through a mutually reinforcing combination of wise economic policies, democratic governance, and enterprising and trustworthy citizens. For example, amidst considerable geographic and cultural diversity, all but two of the top 40 countries in the Index – Hong Kong and Singapore – are electoral democracies.