Clues to EU prosperity

An index that ranks countries on both wealth and well-being shows Slovenia, Czech Republic and Poland outperforming so-called PIGS countries. France is also showing a decline similar to the PIGS.

Part of the Dubai-based Legatum Group, the Legatum Prosperity Index, claims to provide the world’s only global assessment of national prosperity based on both wealth and well-being. It ranks countries based on their performance in eight sub-indices, including economy, governance, personal freedom, and social capital.

The latest study shows that Portugal, Italy, Greece, and Spain all report high levels of corruption, low rates of social trust, low levels of rule of law, and inefficient public sectors, which suggests that their foundations for economic recovery may be weaker than elsewhere in Europe.

For the first time, some of the new EU members from Central and Eastern Europe – led by Slovenia, Czech Republic, and Poland – outperform the so-called PIGS nations on these indicators. France, too, shows a decline similar to the PIGS on certain variables associated with the economy sub-index, such as lower gross domestic savings rates, higher rates of non-performing loans, and more people lacking adequate access to food and shelter, despite its less troubled economy.

The Prosperity Index reveals that out of 110 countries assessed on wealth and quality of life the top three locations are Norway, Denmark and Australia. The UK ranks 13th which is ahead of Germany in 15th position and France which comes in 18th.  

While the UK improved its score by 13% over the past two years, both Greece and Italy have each dropped four places. Elsewhere in Europe, most countries’ absolute Index scores remained stable despite the financial crisis.

Jeffrey Gedmin, President and CEO of the Legatum Institute, which compiles the Index says the Prosperity Index is designed to be a practical tool: “We want to assess the long term drivers of prosperity.”

www.prosperity.com