THE LEGATUM PROSPERITY INDEX™ 2016

Bringing Prosperity to Life

Ireland

Ranked 13th of 149

At a glance

Ranks

13 th on the Legatum
Prosperity Index™

25th
15th
14th
7th
24th
16th
5th
10th
25th

SUB-INDEX RANKINGS

In the Prosperity Sub-Index rankings, Ireland performs best on Personal Freedom and Education and scores lowest on the Natural Environment sub-index.

Visit our Rankings table to see how Ireland compares to other countries.

Prosperity Gap

The ‘Prosperity Gap’ takes a country's GDP and uses it as the yardstick to measure a nation's expected Prosperity Index ranking.

Ireland has consistently delivered a prosperity surplus that has placed it among the world’s best over-deliverers. Its current surplus ranks it at 18th globally. Its surplus narrowed over the crisis, and remains at a slightly lower level now than it was in 2008.

Note:
In the chart above, each dot represents a country. The curve shows the general tendency with which prosperity increases as GDP per capita increases. 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. Likewise, if a country rises above the curve, then we can say that it is over-delivering prosperity for its citizens. Learn more about the Prosperity Gap here.

Alternatively, have a look at the Prosperity Gap view on our Rankings table for a full list of countries and to see how each of them are performing on the various sub-indices.

Commentary

Ireland is recovering from the 2008 economic crisis which caused its Economic Quality sub-index to drop 11 ranks between 2008 and 2012. A European fiscal treaty, endorsed in 2012 enabled Ireland’s economy to regain its fiscal health and, consequently, in 2013, Ireland became the first country to exit a European Union bailout. With a trailing 5-year growth rate of 2.38%, its economy has surpassed its 2008 level of GDP and is now one of the fastest growing in the Eurozone. This is reflected in a five rank increase in the country’s Economic Quality since 2012, although Ireland is still far from reaching the same levels of prosperity in this sub-index than in 2007 as other problems remain. Ireland’s unemployment rate went from 4.6% in 2007, peaking at 14.7% in 2012 and dropping to 11.6% in 2016, still two and a half times its pre-crisis level. Satisfaction with household income is 31% lower than it was in 2007 and neither has the female labour participation rate fully recovered.

Ireland’s growth rate has recovered strongly since the crisis, to significantly exceed its 2007 levels. This achievement has not been matched by satisfaction with household income which is struggling to return to its pre-crisis levels.
Ireland’s growth rate has recovered strongly since the crisis, to significantly exceed its 2007 levels. This achievement has not been matched by satisfaction with household income which is struggling to return to its pre-crisis levels.

Despite ups and downs in its economy over the last decade, Ireland remains a very prosperous nation. Its Business Environment remained strong and stable throughout the crisis. This can be attributed to the country’s flexible hiring and firing practices and its high ease of starting a business. Whilst it has fallen two places since 2007, Ireland still has the world’s tenth best Social Capital. In many ways Ireland has grown a better place to live, with positive changes particularly observed in Education and Personal Freedom.

Personal Freedom has been strengthened in real terms as well as gaining nine ranks to 5th place in 2016 since its lowest point in 2013, becoming Ireland’s best performing sub-index. Such improvement can mainly be attributed to the legalisation of same sex marriage in 2015 and an 8% increase among respondents who believe that that their area is a good place for LGBT people to live. This has also come alongside growing tolerance of racial and ethnic minorities within society and greater openness towards immigrants.

As Ireland’s second best performing sub-index, Education is a key attribute of the nation’s prosperity. Since the 1960s Ireland has invested important financial and human resources in education to create one of the best educated workforces in Europe. This has been key for Ireland to attract long-term foreign direct investment over the last decade. Its strong educational legacy has continued with Ireland gaining three ranks in the Education sub-index over the last decade to attaining 7th place in 2016. This can be attributed to Ireland having the highest tertiary education per worker in Western Europe after a 33% increase in this variable since 2007. Additionally, citizen satisfaction with the education system, which reaches 85%, is also the highest regionally.

Such a strong education system has not been matched by an equally good healthcare system in Ireland. Ranked 24th, Health continues to be one of Ireland’s more disappointing sub-indices. This can be attributed for a drop in citizens’ mental health- fewer have reported recent experiences of joy and more have reported recent experiences of sadness since 2007. Obesity rates have risen 11% in the last ten years, reaching a staggering 25.6% of the population- the third highest rate in Western Europe after the United Kingdom and Malta. Finally, despite strong recent economic growth, improvements in sanitation facilities are the lowest regionally, having remained stagnant over the last decade.


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Data

How to read this graph:
When comparing multiple countries on a spider chart, data points that appear
further away from the center represent a better performance to the points that are closer to the center.

Special Analysis

Special Analysis

OVERALL

Ireland’s prosperity levels have recovered well since declining at the start of the decade due to the 2008 crisis. The country’s prosperity surplus is among the best in the world and strong improvements in Education and personal freedom have propelled Ireland to the global top ten.

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Areas of Success
Areas of Success

Personal Freedom is Ireland’s strongest asset. Not only has Ireland gained nine ranks in this sub-index since 2013, to currently being ranked 5th but it has also experienced a strong increase in its absolute score over the same period. This is predominantly due to the legalisation of same sex marriage in 2015 and in an 8% increase among respondents who believe that that their area is a good place for LGBT people to live. Education is a close second, ranking 7th in 2016. Here tertiary education per worker has increased by 33% since 2007 and 95% of respondents feel that children have the opportunity to learn and grow everyday. Crime rates have fallen by 15% in the last three years, contributing to Ireland’s rise in the Safety & Security sub-index from 18th to 16th.

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Areas of Little Change
Areas of Little Change

Little movement has been recorded by the Index in two of Ireland’s strongest areas of prosperity: Governance and Business Environment. Both have maintained a stable position in the global top 15 over the last decade, seemingly having been largely unaffected by the adverse effects of the 2008 crisis. This is predominantly a combination of a stable judiciary and efficient regulatory framework which facilitate dynamic investment and support business formation. Additionally, Ireland benefits from flexible hiring and firing practices and is the sixth easiest place to start a business in Western Europe.

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Areas of Improvement
Areas of Improvement

Ireland’s largest absolute decline has occurred in the Economic Quality sub-index, where the nation has fallen from 18th to 25th in the last decade. This is predominantly a result of the 2008 crisis. Although growth rates have succeeded in passing their pre-crisis levels, the country’s unemployment rate at 11.6% is still among the highest in Western Europe, and satisfaction with household income is 31% lower than it was in 2007.