Human progress ‘goes beyond economics’


New Zealand is fourth in Legatum Institute’s Prosperity Index which compares much more than economic performance:

In the foreword Sian Hansen Executive Director of the Institute writes:

The Prosperity Index tells us that the story of human progress goes beyond economics. It tells us that for nations to flourish they must provide opportunity and freedom to their citizens. It shows how access to quality healthcare and education provide the foundations on which nations can grow. It proves that effective and transparent government empowers citizens to take control of their lives. And it shows that protection from violence and oppression, as well as strong social bonds, are crucial to a thriving society. . . 

She also warns the world is becoming more dangerous:

Last year the Prosperity Index struck an optimistic tone, explaining that the world was becoming increasingly prosperous. This remains true, but the 2015 Prosperity Index reveals that the world is becoming an increasingly dangerous place. The rise of Islamic State has changed the nature of global security, particularly in the Middle East. The prelude to this in both Iraq and Syria was the fragmenting of social bonds. Worryingly, other countries in the region are seeing similar fissures emerging. A dramatic decline in the Safety & Security subindex in Africa and the Middle East has been driven by increased tensions and violence between different social groups as well as an increase in refugees and internally displaced persons.

Falling levels of safety and security also blight the United States’ performance this year. The US has fallen one place in the overall rankings to 11th but one finding stands out: the US ranks outside the top 30 in the Safety & Security sub-index, down two places to 33rd this year. In contrast, Canada has risen to first place in the Personal Freedom sub-index this year, reflecting high scores in measures of tolerance and civil liberties. . . 

New Zealand’s rankings were:  economy: 14; entrepreneurship and opportunity: 17; governance: 2; education: 6; health: 19; safety and security: 11; personal freedom: 2; and social capital: 1.

Good news keeps coming


Business confidence remains at a 14 year high in the ANZ’s monthly business confidence survey:

. . . Chief economist at ANZ Cameron Bagrie says the economy is in a sweet spot, despite challenges such as low deposit restrictions, a high dollar, and signs interest rates will rise next year.

“The real encouraging sign about the reading for this month is that businesses looked through all of those dynamics, had a bit of a glance, a bit of a look and have come to the conclusion – when all’s said and done – this little economy is still performing pretty well.” . . .

That’s not just the view of people here.

The Legatum Institute’s Prosperity Index puts New Zealand in fifth in the world, and first in the Asia Pacific region.

The latest Legatum Prosperity Index ™, which ranks nations according to extensive wealth and wellbeing factors, reveals that global prosperity has risen over the past five years, largely due to improvements in entrepreneurship, health and education.

Norway leads the overall rankings for the fifth year and is joined in the top ten by Switzerland (2nd), Canada (3rd), Sweden (4th), New Zealand (5th) and Denmark (6th).

The US (11th) and UK (16th) are both facing economic decline, dropping four and two places respectively for their performance in this sub-index1. . .

Now in its seventh year, the Legatum Prosperity Index™ is a unique and robust assessment of global wealth and wellbeing, which benchmarks 142 countries around the world in eight distinct sub-indices: Economy; Education; Entrepreneurship & Opportunity; Governance; Health; Personal Freedom; Safety & Security; and Social Capital. . .


The New Zealand profile  is here.

We’re ranked at 17 for the economy; 15 for entrepreneurship and opportunity; 2 for governance, 1 for education, 20 for health, 15 for safety and security, 5 personal freedom, 2 for social capital.


When #gigatownoamaru becomes the Southern Hemisphere’s first gigatown we’ll be contributing even more to the nation’s prosperity.

More social cohesion, less regulation


One of the findings from the  Legatum Institute’s Prosperity Index was the inverse relationship between social cohesion and regulation:

It found countries that had low levels of social capital tend to be highly regulated and vice versa:

Social capital is one of the most important components of prosperity. The term ‘social capital’ encompasses factors  
such as social cohesion and engagement, as well as community and family networks.1 In every region of the world,  social capital correlates negatively with government regulation.

Does excessive regulation decrease social capital or do high levels of social capital lead to low levels of regulation? Research suggests that the causal relationship follows the latter example, with higher levels of social capital leading to fewer but better regulations. Indeed societies that are highly trusting—both in government institutions and in one’s fellow citizens—tend to demand fewer, less complex and less restrictive economic regulations.

It goes on to say that countries with little social cohesion have more regulation which results in result in unwanted barriers to entrepreneurial activity, innovation, and competition.

By contrast, in countries with high levels of social cohesion entrepreneurs are considered to provide societal benefits and, as a result, these countries tend to erect fewer regulatory barriers to entrepreneurial activities.

Social cohesion provides trust which necessitates less regulation which provides social and economic benefits.


NZ 5th in Prosperity Index


New Zealand is ranked fifth out of 144 countries in the The Legatum Institute’s prosperity index.

The institutes uses eight measures to determine its ranking and is the only one in the world which uses both wealth and well-being.

New Zealand’s economy is ranked 27th; we’re 13th for entrepreneurship and opportunity; 2nd for governance; 1st for education; 20th for health; 13th for safety and security; second for personal freedom and 4th for social capital.

The first place for education is based on access to it, the quality of it and human capital.*

Switzerland is in first place for its economy and also governance, but 32nd for education; Denmark is first for entrepreneurship and opportunity; Luxemburg is in top place for health; Iceland is first for safety and security, but 61st for economy; Canada is first for personal freedom and Norway is first for social capital.

Zimbabwe has the worst economy (anyone still think printing money is a good idea?) and governance; the Congo is worst for entrepreneurship and opportunity, and health; the Central African republic is worst for education; Chad is bottom ranked for safety and security; Yemen is last in personal freedom and Togo is the worst country for social capital.

The top 10 are Norway, Denmark, Sweden, Australia, New Zealand,Canada, Finland, Netherlands, Switzerland and Ireland.

The bottom 10 (from least worst to worst): Ethiopia, Yemen, Zimbabwe, Togo, Burundi, Haiti, Chad, Afghanistan, Congo and Central African Republic.

Key findings from the index:

  •  Prosperity is increasing but safety and security are decreasing.
  • The USA is out of the top 10 for the first time – it’s 12th, mainly because of a fall in the entrepreneurship and opportunity ranking.
  •  The rise of the east continues with Hong Kong, Singapore and Taiwan in the top 10 for economy and top 20 overall.
  •  Vietnam, Thailand, Indonesia and Malaysia are all rising.
  • Accountable governance and entrepreneurship are key drivers of prosperity, especially for the top 50 countries. In developing countries health and education are more important.

If you’re wondering if that last point is an argument for benign dictatorships in developing countries, the next point gives an answer:

  •  Accountable government is a key stepping stone to prosperity. 27 of the top 30 countries are democracies.
  • Tolerance is also good for prosperity.

This is very much a once-over-lightly on a very interesting report.

Hat Tip: TV3

* P.S. does our top place for education change my mind on the discussion that it’s not where we are in the world but whether we’re good enough that matters?

No. Being best in the world is very good but if our education system is failing to deal with the long tail of underachievers it still needs to be better.

Te Maru o Nga Kura a Iwi (the Iwi Education Authority) agrees.

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