As prosperity continues to rise in 113 different countries, growth in national income, output, and total expenditure can be expected.
According to the 2018 Legatum Prosperity Index, several countries have improved their rankings in terms of the 9 Pillars of Prosperity (Economic Quality, Business Environment, Governance, Personal Freedom, Social Capital, Safety and Security, Education, Health, and Natural Environment).
The Business Environment pillar has seen the biggest gain in a year at a global level. Specifically, countries belonging to Asia-Pacific, Eastern Europe, and Sub-Saharan Africa have seen the greatest 10-year gains.
Ever since the Prosperity Index began, the Asia-Pacific continues to grow more than any other region. Being home to some of the world’s greatest economic success stories, it comes third in the regional ranking of these three pillars:
- Business Environment
- Economic Quality
The two countries that contributed greatly to this huge increase in economic well-being are China and India. They have lifted many people out of poverty and have faster-growing economies than those in the West. Both countries and the region, in general, are home to the rising middle class who expect a higher standard of living.
Steady Rise of Eastern Europe
Over the past decade, Eastern Europe has had a steady rise in prosperity. As the region with the second largest prosperity increase last 2017, it has been growing at a faster rate than the global average. Since 1991, the region’s GDP per capita has risen over €10,000, but the drivers of prosperity vary.
Particularly, these four zones emerge as the main drivers of prosperity:
- The northern “entrepreneurial sea”
- The central “industrial hinterlands”
- The southeast “food hub”
- The eastern former CIS (Commonwealth of Independent States)
The Legatum Prosperity Index 2018 shows that for each zone, there were different journeys taken towards prosperity. Likewise, different challenges were overcome to build future prosperity.
More Growth Needed in Sub-Saharan Africa
Although Sub-Saharan Africa has shown a continuous trend of gradual improvement, the region needs more. With the huge gap between Sub-Saharan Africa and the rest of the world, it remains the weakest performer.
But over the past decade, Sub-Saharan Africa has had the largest improvement in the Business Environment. This is due to the ease of starting a business, especially for budding entrepreneurs.
Overall, one of the key drivers in the regions of Asia-Pacific, Eastern Europe, and Sub-Saharan Africa is a huge improvement in the entrepreneurial environment. As businesses focus more on a long-term investment strategy, they help induce economic prosperity and improve the general welfare of people.
Understanding the Factors of Economic Prosperity
Both countries and individuals rely on economic prosperity as a key element to their quality of life. As economies move toward creativity and innovation, they must grow to:
- Create good jobs
- Strengthen industries
- Encourage business investment
To improve wealth and living standards, the following factors are considered.
Based on two surveys by the 1996 International Institute for Management and the World Economic Forum, economic competitiveness highlights:
- Open international trade
- Well-functioning capital markets
- Efficient government control
The surveys also came to the conclusion that the skills of a country's workers were of paramount significance to its competitive value.
Education is crucial for the long-term health and prosperity of a nation. This is because economic growth depends upon the skills, traits, and values of a country’s labor force.
A worker’s efficiency and ability to produce new technologies contribute to enhanced productivity and an improved standard of living
A country’s policy-making process is indicative of its economic freedoms. From regulated government spending, tax rates, credit, and product markets, policies can affect institutions.
This gives rise to questions relating to which institutions are essential requirements for prosperity, as well as which policies should be put in place to enhance economic welfare.
4. Growth Rate
Over time, compound interest rates can transform small changes into huge differences in standards of living and wealth creation. It’s valuable in boosting economic growth for citizens in order to consequently have more choices as well as greater wealth.
For nations with significant levels of poverty, economic growth is necessary. However, even if millions of people get lifted out of poverty, economic growth must be a goal that countries continuously work towards. This way, citizens may continue to enjoy a good quality of life for the years to come.
It is through progressing economic growth that a country can generate its needed resources. When resources are abundant, a nation can address many developmental challenges.