Advancing the understanding of what drives success in nations

The principles of prosperity at a moment of global crisis

We are launching this year’s Legatum Prosperity Index at an extraordinary moment in time. Across the world, COVID-19 is dominating our political, economic, and social debate. None of us was expecting 2020 to look like this. It is a moment that, wherever we are in the world, will challenge our principles and our decision making, and reveal what we really believe.

If this time is about anything, it is for each nation to decide its character and who it wants to be. The decisions we make now will create the foundation for our nations going forward, and determine the legacy we will leave for future generations. We need to decide carefully.

China was the first country to be impacted by COVID-19, and its response framed the context for the rest of the world. Its approach was one that moved to withhold information about the virus, restrict the freedoms of its people, and lock down its economic engine. Such actions are consistent with ranking 90th in the Index for Governance and 159th for Personal Freedom. Subsequently, many other countries responded by severely curtailing civil rights and economic freedoms. But these are not the actions that build prosperity, they are the ones that weaken it.

At a time of crisis, it is our core principles that we should be drawing on — the things we know to be true. It is here that the Index can be a guide, reminding us of what builds and protects prosperity in the most challenging of times. The Index has been purposefully designed to help leaders around the world focus on what needs to be protected and what is of value. During a time of crisis, the Index can equip leaders to ensure that their decisions enable their citizens to flourish.

We know that prosperity is built when:

  • Governments make decisions in such a way that engenders trust, and with integrity respecting the freedom of its citizens: prosperous nations are ones where governments govern with the agreement of the people, and where citizens take responsibility.
  • Economic decisions are taken responsibly to sustain an enabling environment for productive employment, sustained economic growth and personal development.
  • The principles of personal responsibility and freedom go hand in hand. Citizens are free and order their lives taking responsibility for their own families and communities
  • People take care of their own physical health and mental well-being and healthcare is accessible to all. They do not make decisions that threaten the health of others.
True prosperity means everyone, regardless of the darkness of the days, has the opportunity and responsibility to fulfil their unique potential and play their part in strengthening their communities and nations. Prosperous nations are built on trust and respect.
The backdrop to 2020

Not only does the Legatum Prosperity Index act as a guide through difficult times, it also assesses the context in which decision makers are operating. We are hugely fortunate that the backdrop to the COVID-19 crisis is one where global prosperity was at its highest level ever. There is never a good time for a global health crisis, but if there has to be one, the progress that has been made over the last decade provides emerging nations with a better context in which to tackle it.

This year’s Index reveals that, prior to the coronavirus pandemic, global prosperity stood at a record high, with 147 out of 167 countries seeing prosperity rise over the last decade. This increase is due to wide ranging improvements: better health, education, and living conditions, especially expansions in immunisation programmes and antenatal care, increases in pre-primary and tertiary education enrolment, and reductions in poverty, greater access to water and sanitation services, and increased digital connectedness.

In addition, economies around the world had become more open due to improvements to digital and transport infrastructure. Many of the financial protections that are necessary to provide investors with confidence — property rights, investor protections, contract enforcement — had also strengthened, leading to an increase in the extent to which finance was made available to business.

A warning

However, there is also a warning in the Index. The improvement seen in the last 12 months had not kept pace with the progress of the previous two years, as Asia-Pacific and Western Europe stagnated and North America deteriorated slightly. In addition, stagnating governance and personal freedom around the world is holding back further improvement in prosperity.

As each nation navigates its way through and out of the pandemic, good governance will be crucial in creating more prosperous societies. Now, more than ever, is the time for governments to show decisive and effective leadership. An autocratic approach will not overcome the challenges that lie ahead. Success is dependent upon the full involvement and engagement of a society where personal freedoms are protected.

Success is dependent upon the full involvement and engagement of a society where personal freedoms are protected.

Innovation and dynamism will be critical to forging strong economies following the disruption of the pandemic. Developed nations that expect so much of emerging nations must beware the trap of falling into the mindset of an overdeveloped society, vulnerable to entitlement and complacency, losing sight of their values and heritage. The West must avoid a managerial mindset that seeks to avoid change and risk, but in the process sacrifices innovation, purpose, and meaning: this would create a window through which the inheritance of hard-won prosperity from their forbears would evaporate.

For a time such as this, the Index functions as a transformational tool that provides leaders of nations with a holistic and comprehensive framework that can inform the strategic choices that need to be made, to further build inclusive societies and more open economies, and improve the lived experience of all citizens, to drive greater levels of prosperity around the world.

In the wake of COVID-19, we at the Institute are even more ambitious to support political leaders, policymakers, investors, business leaders, philanthropists, journalists, and researchers, to share insights and forge closer relationships to effect the renewal and implementation of policies that can realise and unlock real prosperity.