Legatum Prosperity Index: American Dream at risk

The 2012 Legatum Prosperity Index (Table) places NZ 5th overall. Sub-index rankings are:

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Embargo: 00:01 GMT 30th October 2012

Latest Legatum Prosperity Index™: American Dream at risk in key election year

• US drops out of global prosperity ‘top ten’ for the first time, and falls eight places in ‘Entrepreneurship & Opportunity’ sub-index.

• Fewer US citizens agree that working hard will result in success.

• Asian ‘Tiger Cub’ countries climbing Index rankings quickly.

• European Economy score drops as Euro crisis continues.

• Scandinavian countries lead the world, with Norway, Denmark and Sweden ranking highest for overall prosperity.

• Legatum Prosperity Index™ redraws the world map, grouping new continents together according to shared attributes between nations.

As the race for the White House reaches fever pitch, the latest findings from the Legatum Institute’s Prosperity Index™ reveal that the American Dream is in jeopardy. In an unprecedented fall, America drops to twelfth position in the worldwide prosperity rankings – with weakening performance across five of the Index’s eight sub-categories.1

Meanwhile, Scandinavian countries prosper most, with Norway, Denmark and Sweden topping the overall Index (first, second and third), and Finland performing well (seventh). A new generation of Asian ‘Tiger Cubs’ has also emerged, with Vietnam, Thailand, Malaysia, and Indonesia all performing well in the rankings.

In Europe, overall prosperity has increased, with the Netherlands, Ireland and Germany each climbing the rankings (now eighth, tenth and 14th respectively). However, more than two thirds (24 out of 33) of European countries have seen a decline in their Economy score since 2009 – undoubtedly as a result of on-going economic difficulty in the region.

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 categories: Economy; Education; Entrepreneurship & Opportunity; Governance; Health; Personal Freedom; Safety & Security; and Social Capital.

Jeffrey Gedmin, President and CEO of the Legatum Institute, said: “The Legatum Prosperity Index™ allows us to paint a comprehensive picture of what makes a country truly successful, encompassing traditional measures of material wealth, as well as capturing citizens’ sense of wellbeing – from how safe they feel, to their perceived personal freedom. GDP alone can never offer a complete view of prosperity.

“We believe that by measuring the quality of education, healthcare, social capital and opportunity, our Prosperity Index gives the clearest view of how countries are prospering today and how they are likely to prosper in the future.”

www.prosperity.com To see the full overall rankings, sub-index scores and to compare countries and years, please visit:

The future of the ‘American Dream’

“With the US now just days away from the presidential elections, the US drop in the Prosperity Index has come at a pivotal time”, said Mr Gedmin.

According to the Index, the national ethos of the US is under threat, as fewer citizens perceive that working hard gets you ahead (this has fallen from 88% to 85% since last year). And, as business start-up costs rise and high-tech export levels drop, America has fallen eight places in the Entrepreneurship & Opportunity sub-index.

Interestingly, the US Governance rank has also declined, due in large part to the Government approval rate, which has fallen to 39% in 2012 (from 42% last year).

In addition, the US Economy sub-index ranking has dropped to 20th this year and has fallen a total of seven places since 2009. The US now lies in twentieth position, far behind Asia’s leading economies and in the shadow of Eurozone powerhouse Germany (sixth).

Mr Gedmin added: “As the US struggles to reclaim the building blocks of the American Dream, now is a good time to consider who is best placed to lead the country back to prosperity and compete with the more agile countries that have pushed the US out of the top ten.”

Barriers to prosperity

The Legatum Prosperity Index™ has this year for the first time redrawn the world map, pulling nations into new proximities based on shared attributes. The six new continents reveal that even the most robust economies face their own obstacles to achieving prosperity. The continents have been characterised as follows:

1. Growth without Personal Freedom.

2. Social Capital as a substitute for Governance.

3. Long road to prosperity.

4. Promising economies, unsafe countries.

5. Good Education, poor Governance.

6. Top performers.

For example, the high-growth markets of China, Malaysia, Thailand, Saudi Arabia and Vietnam score well in the Economy sub-index but rank amongst the worst countries for promoting and safeguarding the Personal Freedom of their citizens (as per continent 1).

By the same token, a cluster of African and ex-Soviet nations – including Zambia, Sudan and Kazakhstan – all score relatively highly in the Social Capital sub-index, while demonstrating a chronic lack of government provided support (Governance), as communities attempt to fill the gaps left by the state (as per continent 2).

For a full view of these six new continents and the countries they comprise, please download and share our infographic: http://press.prosperity.com/Prosperity_Index_Infographic.png

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About the Legatum Prosperity Index™

The Legatum Prosperity Index™ is a unique global assessment of national prosperity based on both wealth and wellbeing. In its 6th year, the Index assesses 142 countries, representing more than 96% of the world’s population and 99% of the world’s GDP. Using rigorous research and indepth analysis, the Index ranks countries based on their performance in eight subindices, including Entrepreneurship & Opportunity, Governance, Personal Freedom, Health, and Social Capital.

About the sub-indices

The Economy sub-index measures countries’ performances in four areas: macroeconomic policies, economic satisfaction and expectations, foundation for growth, and financial sector efficiency.

The Entrepreneurship & Opportunity sub-index measures countries’ performance in three areas: entrepreneurial environment, innovative activity, and access to opportunity.

The Governance sub-index measures countries’ performance in three areas: effective and accountable government, fair elections and political participation, and rule of law.

The Education sub-index measures countries’ performance in three areas: access to education, quality of education, and human capital.

The Health sub-index measures countries’ performance in three areas: basic health outcomes, health infrastructure and preventative care, and physical and mental health satisfaction.

The Safety & Security sub-index measures countries’ performances in two areas: national security and personal safety.

The Personal Freedom sub-index measures countries’ performance in two areas: individual freedom and social tolerance.

The Social Capital sub-index measures countries’ performances in two areas: social cohesion and engagement, as well as community and family networks.

www.prosperity.com 1 Full definitions of the eight sub-indices of the Legatum Prosperity Index™ can be found at

About the Legatum Institute

Based in London, the Legatum Institute is an independent non-partisan public policy organisation whose research, publications, and programmes advance ideas and policies in support of free and prosperous societies around the world. The Legatum Institute’s signature annual publication is the Legatum Prosperity Index™, a unique global assessment of national prosperity based on both wealth and wellbeing. The Legatum Institute is the co-publisher of Democracy Lab, a journalistic joint venture with Foreign Policy Magazine dedicated to covering political and economic transitions around the world.

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