Polaris  

How does one measure prosperity? And what could that mean for the geopolitical future?

I find limited value in the bevy of indices churned out each year by think tanks, international organizations, media sources, advocacy groups and consulting firms. There are indices for state failure, democracy, freedom, human development, freedom of the press, quality of life, globalization, competitiveness, and corruption, to name just a few, but what exactly do they reveal?

Little. You’re almost guaranteed to find Nordic, Benelux, and Anzac countries towards the top (occasionally also an Ireland, Switzerland or Austria). Chances are there will be an Afghanistan, Congo, Somalia or North Korea at the bottom. That there is little variety between these various rankings suggests a high level of endogeneity or equifinality. And that makes sense. Corruption is less likely when there’s a free press to act as watchdog. Globalization is not really possible without a certain degree of freedom. A competitive, democratic country with a high quality of life is, by definition, not a failed state. 

On occasion there is an index that does not merely restate the obvious, but induces actual questions about what it measures. An example is the Legatum Institute’s Prosperity Index, released today. At first glance, there’s little to set it apart from all the others listed above: Finland leads the way, Zimbabwe brings up the rear. But look a little closer, and some of the results are more than a little provocative. How—and why?—do Brazil and India come out at 41 and 45, while Russia and China end up at 69 and 75?

The Index, despite its name, defines prosperity not just in purely economic terms of material wealth but (in a move that will no doubt delight the leaderships of both France and Bhutan) also social and political welfare. This is prosperity defined largely, and seen this way, it can advance how we think about progress, values and policy priorities.

Here is how the five largest developed economies—the United States (purple), Japan (red), Germany (green), France (blue) and the United Kingdom (orange)—fare across the nine dimensions of prosperity as defined by Legatum:

Other than on social capital, defined as “trustworthiness in relationships and strong communities,” the five countries’ profiles are remarkably similar, and reflect something close to a consensus among leading states. Presumably, joining the ranks of current powers will require either an amendment to the values and priorities that help ensure prosperity, or an adaptation to them. Now, take a look at a similar comparison of the four largest developing economies, the so-called BRICs—China (green), Russia (orange), Brazil (blue) and India (red)—and the picture is a lot more messy.

India and Brazil’s profiles are oriented horizontally, towards democratic institutions, social capital, personal freedom and governance. India lags the other three in terms of education, health and (perhaps most disturbingly) entrepreneurship and innovation, while Russia is behind the others in matters of safety and security. It is notable that only on economic fundamentals do the four BRICs actually converge.

What does all that mean? According to one of its creators, the Index reveals why Indians and Brazilians, who benefit from better-developed “soft infrastructure,” are “on average happier than Russians or Chinese.” Not that that we should let that go to our heads.

But I’m less intrigued by the conclusions of the index, than the questions it asks us as consumers of data. Which BRIC model—and you clearly have four distinct ones—provides the best recipe for increasing a country’s prosperity? Can an emphasis on one dimension lead to benefits elsewhere? What can such a ranking tell us about the values espoused by specific countries?

Perhaps most importantly, will the first diagram above evolve gradually to look like the second? Or will it be the other way around?