THE LEGATUM PROSPERITY INDEX™ 2016

Bringing Prosperity to Life

Japan

Ranked 22nd of 149

At a glance

Ranks

22 nd on the Legatum
Prosperity Index™

19th
21st
17th
20th
4th
3rd
49th
101st
48th

SUB-INDEX RANKINGS

In the Prosperity Sub-Index rankings, Japan performs best on Safety & Security and Health and scores lowest on the Social Capital sub-index.

Visit our Rankings table to see how Japan 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.

Like many other OECD countries, Japan delivers a moderate prosperity surplus similar to that of the US and has done so for the past decade, making it something of a poster boy in a geographic region characterised by prosperity deficits. The most prominent over-performances are observed in the Safety & Security, Health, and Governance sub-indices, while deficits are exposed in the Social Capital, Personal Freedom, and Natural Environment sub-indices.

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

The Prosperity Index captures Japan as a prosperous and safe state carefully maintaining the balance between a modern market economy and its unique social values. Ranked globally at 22nd for overall prosperity and standing out as the most prosperous Asian country barring Singapore, Japan in many ways resembles other OECD countries as a democratic, market economy. Japan has long maintained high levels of public safety through low crime rates (ranking 3rd in Safety & Security) and a healthy population (ranking 4th in Health with the second highest life expectancy in the world). However, in other ways, Japan is far more akin to some of its regional neighbours. Contrary to relatively liberal and ethnically diverse Western societies, tolerance and civil participation at a broader society level are constrained in Japan by the combination of a highly homogeneous ethnic population, a hierarchical culture, and strong family traditions.

Japan’s governance is better than OECD average while its social capital worse than both the OECD and East Asia.
Japan’s governance is better than OECD average while its social capital worse than both the OECD and East Asia.

The third safest country in the world, Japan sets the global standards in Safety & Security sub-index together with Singapore and Luxembourg, both comparatively easier to police due to their much smaller territorial and population size. With harsh gun control policies and a society-wide aversion to anyone with criminal records, violent crimes are rare. The homicide rate is the second lowest in the world and just a tenth of the average level in the OECD. Here Japan's traditional society plays a significant role. Thanks to the close cooperation between police and widespread neighbourhood associations, all crime is kept low. Indeed only 6% of Japanese report having had property stolen in the last 12 months, half the rate in countries like the UK.

Like many advanced economies, Japan performs well in the Health sub-index, ranking 4th in 2016. Renowned for the longevity of its people, the average Japanese citizen has a life expectancy of 83.6 years, the second highest in the world after Hong Kong, and the world's fourth lowest mortality rate. Lifestyle helps: just 3.3 percent of the population are obese, the lowest of any advanced economy. As a sign of people’s health status, less than a fifth of the population say they have health problems, and although anecdotes about Japan's stressful work environment are shared, fewer Japanese experience sadness or worry than their Asian neighbours and OECD counterparts.

It is in the Personal Freedom sub-index that Japan starts to depart from other OECD countries. The average rank for the OECD is 21st in this sub-index, while Japan just squeezes into the global top 50. This to some extent can be ascribed to its strict migration policy, and much as efforts to safeguard order and stability and fomenting social solidarity are important, a determined willingness to preserve the “Japaneseness” at the same time has a corrosive impact on tolerance of minorities. With less than two percent of total population being foreign nationals and most of the ethnic minority groups living in peripheral islands, the fact that only 55% of Japanese people think the country a good place for ethnic minorities, and just 45% thinking it a good place for immigrants is less surprising. A society with highly traditional and conservative social values has also been slow to square itself with emerging liberal trends. Though homosexuality is no longer a crime, civil union between same sex has yet to be legally acknowledged.

The Prosperity Index captures the biggest divide between Japan and other OECD member states in the Social Capital sub-index. Japan ranks just outside the top 100, 78 ranks behind the OECD average, revealing a fundamental cultural discrepancy that moves the country closer to its East Asian neighbours, a cohort haunted by structurally low levels of social capital. Despite its sustained democratic political system, levels of linking social capital, captured by measures such as the proportion of people who have voiced their opinion to a public official, is low. Just 17% of Japanese say they did this in the past 12 months, a level typically observed in authoritarian regimes. The traditional family and immediate community nature of Japanese society, also limits broader bridging social capital. While family ties in the Index are strong, Japan does not perform well on broader civic measures such as volunteering. Merely a quarter of Japanese say they helped a stranger in the last year, one of the world’s lowest levels.

Nevertheless, a rising environmental consciousness in Japan demonstrates a brighter path for other Asian countries in the Natural Environment sub-index. With some of the strictest pesticide regulations and an increasing policy focus on wastewater treatment and resolving air pollution, the country has witnessed in the last decade steady improvement in the Natural Environment sub-index, jumping from 57th in 2007 to 48th in 2016, the third highest across Asia. This comes despite concerns over pollution from the Fukushima disaster.

Overall, Japan has seen stable performance in the Prosperity Index over the last ten years, consistently over-delivering based on its wealth. Progress into the global top 20 requires dedicated efforts to cultivate social capital by encouraging wider civic participation and cooperation, as well as to improve social conditions for ethnic and social minorities.


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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

Japan has maintained a high level of prosperity for the last ten years, comfortably sitting within the global top 25 most prosperous nations. Its prosperity surplus remains stable as recent worsening trends in the Social Capital and Personal Freedom sub-indices are compensated by strong performance in Safety & Security and Health, as well as improvements in the Natural Environment and Governance sub-indices.

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Areas of Success
Areas of Success

Japan has risen by nine ranks in the Natural Environment sub-index over the past decade, and by four ranks in Governance and Economic Quality. Propelled by increasing calls for environmental protection from the population, the government has committed to preserving the environment and reducing pollution. The problem of fish stock overexploitation has been contained by more sustainable fisheries policies and wastewater treatment has seen substantial improvement. In Economic Quality, increased female labour force participation and lower unemployment have helped to drive improvement over the last decade. In Governance, greater government effectiveness and the reversal of declining confidence in government have helped the country’s rise.

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Areas of Little Change
Areas of Little Change

Little change has happened over the last decade in Japan’s strong ranking in the Safety & Security sub-index, as crime remains low. Health and Education have also been static at good levels. Nevertheless, there is room for improvement in the Business Environment sub-index, where Japan has been hovering around 20th for a decade. The labour market remains inflexible as a result of Japan’s overprotected labour policy and protections for elder employees. Access to credit for business has been hit by economic stagnation, constraining business growth.

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Areas of Improvement
Areas of Improvement

Japan fares worst in the Social Capital sub-index, with 45 rank fall over the past decade. Already equipped with dynamic and well-organised close community associations, the government should devote more energy to encouraging civic participation, as demonstrated by the voluntary and collective mobilisation immediately after the Fukushima disaster in 2011, as well as cultivating general trust among citizens beyond community level. In terms of Personal Freedom, a more tolerant approach towards immigrants and ethnic minorities will help Japan rise.