THE LEGATUM PROSPERITY INDEX™ 2018

Creating the Pathways from Poverty to Prosperity

Summary

Prosperity is more than just the accumulation of material wealth, it is also the joy of everyday life and the prospect of an even better life in the future. This is true for individuals as well as nations.

The Legatum Institute exists to promote policies that create pathways from poverty to prosperity. We believe that every individual has immense personal value and potential and, for us, prosperity requires that people have the opportunity to fulfil that potential and to help others realise theirs. That means prosperity can never just be about material wealth; at its core it also entails personal and social wellbeing, such as having a home, an education and family and friends who care for us. The journey towards prosperity is therefore not just about what we contribute, but about who we become.

The goal of the Legatum Prosperity Index™ is simple: by illustrating how countries have moved toward or away from prosperity, we want to help identify those pathways that lead from poverty to prosperity.

To achieve that goal, the Prosperity Index describes the conditions required for prosperity. We describe these conditions as the combination of nine pillars: Economic Quality, Business Environment, Governance, Personal Freedom, Social Capital, Safety and Security, Education, Health, and the Natural Environment. Using data for 149 countries over eleven years, we track the journeys made by countries towards or away from prosperity.

The goal of the Legatum Prosperity Index™ is simple: by illustrating how countries have moved toward or away from prosperity, we want to help identify those pathways that lead from poverty to prosperity.

Overall, progress has been positive. Despite a turbulent year in many countries, including divisive elections and terrorist attacks, this year’s Index shows that global prosperity has continued to rise. More countries have seen improvements than those that haven’t, while poorer regions of the world have also advanced. For example, Asia continues its strong improvements in prosperity; and many countries in Sub-Saharan Africa are also progressing, gaining particularly in Business Environment, Governance and Social Capital.

But this improvement is not universal. Of particular concern is the set of countries at the bottom of the rankings that are continuing to decline. We have reported previously on how Venezuela has squandered its prosperity – and sadly, its decline has continued. But a lesser-known example of declining prosperity is El Salvador, which this year suffered a fall in eight of the nine Index pillars. We also know that many countries we do not report on have even worse prosperity. But because of conflict or oppression we do not have the data to report on them. These include Myanmar, North Korea and Syria.

Reflecting the deeper foundations of success, this year’s report focuses on the institutional elements of prosperity. We look at the role of Governance, Personal Freedom, Social Capital and Safety and Security in underpinning both wealth and wellbeing. The strengthening of these pillars enables the development of the other aspects of prosperity. When they are undermined, we see a corresponding decline across other pillars.

For this year’s report we have maintained the methodology developed for last year’s tenth anniversary edition.

For this year’s report we have maintained the methodology developed for last year’s tenth anniversary edition. To understand more about the methodology that underpins the Index, I encourage you to read the Legatum Prosperity Index^TM Methodology Report, which you will find here.

“For many years the Legatum Prosperity Index has provided an innovative and robust metric with which to compare prosperity, including but extending beyond standard income measures, across countries and over time. The methodology behind the index is robust, transparent, and accessible, while the statistician seeking more detail can delve deeper into the index construction. At a time of world-wide interest in assessing human wellbeing in ways that extend beyond standard GNP based metrics, the Index is a best-in-class example of how to combine a range of important variables into a metric that is credible and accessible to policymakers and the lay reader, as well as academics.”

Carol Graham
Legatum Fellow; adviser to the Prosperity Index; and Senior Fellow at the Brookings Institution

About the Legatum Institute

The word ‘legatum’ means ‘legacy’. At the Legatum Institute, we are focused on tackling the major challenges of our generation—and seizing the major opportunities—to ensure the legacy we pass on to the next generation is one of increasing prosperity and human flourishing. Based in London, we are an international think tank and educational charity which seeks to provide evidence-based solutions for those who would see free, just and flourishing societies. We do this through our research and by bringing together those who wish to work towards creating a better, more prosperous world. At the Legatum Institute, we believe that prosperity is not just a journey of accumulation, but one of transformation.

For more information about the Prosperity Index or to speak to one of the Legatum Institute’s experts, please email info@li.com.

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