If you were to look at one measure of a country’s economic health, Gross Domestic Product (GDP) alone leaves out plenty of the factors that make a country a pleasant--or prosperous--place to live. That’s why, in the depths of a global recession five years ago, the Legatum Institute, a U.K. nonprofit thinktank, made a list of 89 factors to measure a country’s prosperity. Last week, the Institute put out its Prosperity Index rankings for 2013, but the United States didn’t make the highlights.
Instead, the top 10 most prosperous countries rankings yielded the usual cast of Scandinavian characters that tend to show up in happiness polls. Norway, for the fifth year in a row, took first prize for most prosperous country in the world.
“Sometimes, when you think of Norway, you think big government, high taxes, and a welfare state, but the prosperity index points to a different picture,” said Nathan Gamester, program director of Legatum’s prosperity index. “It has a very dynamic economy that’s good for entrepreneurs, with low costs for business startups. It also has very close communities with high levels of trust,” he said.
Legatum uses 89 variables to measure a country’s prosperity, spread across eight categories: Economy, entrepreneurship and opportunity, governance, education, health, safety and security, personal freedom, and social capital. Two of the main drivers of prosperity, however, usually include the quality of governance and the extent to which entrepreneurship thrives, said Gamester.
The United States came in 11th place overall, but other economic indicators showed a steeper stumble over the last five years. In 2012, if you were only looking at the economy category, the U.S. still ranked within the top 20 healthiest countries. In 2013, the U.S. has dropped to 24th place.
Upon closer examination, the decline can be explained by things like a decrease in domestic savings rates, in addition to more qualitative measures, like a decrease in satisfaction with the financial system and basic satisfaction with food and shelter.
Another key finding of the report was the meteoric rise of countries like Bangladesh, as well as the growing prosperity of sub-Saharan Africa. As a result, Legatum put together a 20 countries “to watch” list, several of which Gamester sees as making up a “new economic world order.”
Three European countries--Germany, Sweden, and Slovakia--also made that list. And while there’s no conclusive proof that their labor practices are the reason why, it’s probably worth noting that each has a rather different approach to the workweek compared to the United States. In Slovenia, law mandates a maximum 40-hour workweek, while German employees average a 35-hour workweek. Swedes, meanwhile, work 143 fewer hours than Americans per year.