The world's most prosperous countries

Norway leads the way in the annual Legatum Prosperity Index, but the UK doesn't even make the top ten!

The Legatum Prosperity Index has revealed the world's most and least prosperous nations in 2012.

The index - in its sixth year - looked at 142 countries, which account for 96% of the world’s population and 99% of global GDP.

The Legatum Institute claims the results will redraw the world map, realigning nations based on shared attributes.

Measuring prosperity

Most would agree prosperity is not just about money but about quality of life and well-being. The Legatum Index reckons it has found a way of measuring this information numerically.

Eight key factors have been studied to determine the prosperity of a country. These include economy, entrepreneurship & opportunity, governance, education, health, safety, personal freedom and social capital. All of these sub-indexes are equally weighted and used to come to a final overall score for a country.

The data the report uses is gathered from a range of sources like the Gallup polling organisation and the World Bank which allows Legatum to rank performance using these key ingredients to prosperity.

So who made the top ten?

The most prosperous nations

Norway
Denmark
Sweden
Australia
New Zealand
Canada
Finland
Netherlands
Switzerland
Ireland

Scandinavian winners

Scandinavian countries lead the way in this year’s study.

Norway retains its position as the most prosperous nation for the fourth year running. Denmark too has maintained second place, a position it has had since 2009 and Sweden has taken the 3rd spot from Australia.

Big shocks

The United States fell out of the top ten for the first time, finishing in 12th.

Even though the US improved on education, it performed badly in five of the eight other sub-indexes.

The biggest loss was of eight points in the entrepreneurship & opportunity category, which the report explains is driven by US citizens no longer believing hard work will get them ahead. So much for the American Dream.

Europe

Western Europe fared well in the index with most countries ranking in the top 30, apart from Greece and Italy which ranked 49th and 33rd respectively.

The UK missed out on a top ten spot but kept up its position as 13th in the world review, a rank it has held since 2009.

Elsewhere, Germany came just behind at 14th, France 21st and Spain 23rd.

Central European countries placed near the middle of the rankings, apart from the Czech Republic and Slovenia who both got a top 30 spot.

Overall most European nations have seen a drop in their economy sub-index scores, with the effect more pronounced in western Europe. The largest drops in this sub-section came from Greece, Spain, Iceland and Lithuania.

But some were able to rise despite the economic challenges of the year. Switzerland, Germany, Portugal, Slovakia, Bulgaria, Macedonia and Moldova all scored better in this year’s index for economy.

Four countries stood out for their overall improvements in overall prosperity; Slovakia, Moldova, Slovenia and Estonia. The report notes how these Eastern European countries are on the rise while some western countries slow down.

Trends

The Legatum reports notes that the key drivers of prosperity in the top 50 countries were governance and entrepreneurship. But in developing countries health and education played a more important role.

Strong social capital in areas of social cohesion (like tolerance of immigrant populations) and engagement (like volunteering) was related to high levels of satisfaction and in turn economic capital.

Another trend that surfaced in the report was that 27 out of the top 30 countries were democratic nations.

Economy high-fliers

The report identifies eastern countries as ranking well in the economy sub-index. Six of the top fifteen in this category are in Asia.

Hong Kong, Singapore and Taiwan all come top ten when you look at the economy scores in isolation. China, Japan and Malaysia follow closely behind.

Fast climbers

The report indicates that Vietnam, Thailand, Indonesia and Malaysia are rising fast in the prosperity index.

The report cites Indonesia as experiencing the biggest jump in prosperity globally since 2009 moving 26 places to 63rd.

Big drops

Syria has dropped 30 positions in the sub-section category of social capital, which measures things like social cohesion and tolerance, to place 131st while Tunisia has dropped 32 to 122nd.

Elsewhere the US in the economy sub-index ranking has dropped to 20th this year, a total drop of seven places since 2009. The US now lies in twentieth position, trailing Asia’s leading economies and in the shadow of Germany which ranked 6th.