ECONOMIC PROSPERITY

SHAMSUL GHANI
(feedback@pgeconomist.com)

Nov 7 - 20, 2011

The recently released Legatum London Institute report on economic prosperity index places Pakistan at 107th position in a league of 110 world countries covering 93 percent of world population and 97 percent of world GDP. The index is based on 89 different variables and eight sub-indices.

The fact that the number-one world economy US gets positioned at the 10th spot in the index is proof that economic prosperity does not recognize hegemonic military dominance and blown-up GDPs. Most of the top nine other countries are those who have strived to maintain a low military profile and have remained focused on sustained economic development for the well-being and uplift of their people.

TOP 10 & BOTTOM 10 COUNTRIES
LEGATUM PROSPERITY INDEX 2011

TOP 10 COUNTRIES BOTTOM 10 COUNTRIES
COUNTRY RANK 2009 RANK 2010 RANK 2011 COUNTRY RANK 2009 RANK 2010 RANK 2011
Norway 1 1 1 Zambia 98 101 101
Denmark 2 2 2 Kenya 97 104 102
Australia 5 4 3 Mozambique 104 103 103
New Zealand 3 5 4 Nigeria 103 106 104
Sweden 7 6 5 Sudan 106 100 105
Canada 6 7 6 Yemen 100 105 106
Finland 4 3 7 Pakistan 107 109 107
Switzerland 8 8 8 Ethiopia 108 107 108
Netherlands 11 9 9 Zimbabwe 110 110 109
US 10 10 10 CA Republic* 109 108 110

The Prosperity Index ranking is based on the following eight sub-indices which are assigned equal weight. Each sub-index is designed to seek answers to some simple, basic questions

Economy: The sub-index attempts to identify factors contributing to higher per capita income and higher levels of wellbeing.

Entrepreneurship & Opportunity: The sub-index determines characteristics of a society that drive the citizens to assume entrepreneurial responsibilities and seek opportunities to raise the levels of income and wellbeing.

Governance: The sub-index identifies government institutions and government functions that influence the levels of per capita income and wellbeing.

Education: The sub-index attempts to determine the influence of educational system and learning environment on the quality of human capital and the level of wellbeing.

Health: The sub-index attempts to identify the characteristics of a healthy society and the influence of mental and physical health on the levels of income and wellbeing.

Safety & Security: The sub-index seeks to determine how do the personal safety of citizens and national security contribute to augment the levels of income and wellbeing?

Personal Freedom: The sub-index seeks to measure the effects - on prosperity and well being - of such sensitive variables as freedom of expression/ belief/ association, personal autonomy and tolerance of immigrants and minorities.

Social Capital: The sub-index seeks to explore the types of social networks, relationships and institutions that can be associated with higher income and wellbeing.

PAKISTAN'S RANK BASED ON SUB-INDICES
LEGATUM PROSPERITY INDEX 2011

SUB-INDEX RANK AMONG 110 COUNTRIES SUB-INDEX RANK AMONG
110 COUNTRIES
Economy 96 Health 96
Entrepreneurship & Opportunity 86 Safety & Security 109
Governance 98 Personal Freedom 104
Education 105 Social capital 100

Constructed on the basis of 89 variables, the 2011 Legatum Prosperity Index mentions in its methodology section: "The concept of prosperity is multidimensional. Subjective wellbeing encompasses all aspects of human life, including but not restricted to emotional happiness and life satisfaction. Similarly, the concept of wealth extends beyond GDP per capita to incorporate qualitative and distributive aspects not captured by monetary measures. If wealth and wellbeing could be measured in an appropriate way by single variables, there would be no need to construct our Index on such a complex basis. But prosperity is a multidimensional concept. The index seeks to explore and understand this richer complexity of prosperity."

The variable most-immune to the size of material wealth and the level of personal safety is, possibly, Average Life Satisfaction. Economic prosperity rank when viewed in conjunction with the two variables - personal safety and average life satisfaction - highlights an interesting contrast between material supremacy and actual life satisfaction.

Despite a humiliating economic rank of 107/110 and a personal safety factor, as low as 40.8 percent, the majority of Pakistani people (58 percent) feels satisfied with life. Besides Pakistan, most of the Asian nations with heterogeneous religious beliefs feel contented with life irrespective of economic conditions and safety concerns. How to define this phenomenon in economic parlance? There is something really subliminal that keeps these people going in the face of destabilizing adversity. What is it? Closeness to religion, perhaps. Is the East more religiously inclined than the West - a good hypothetical question!

SELECTED ASIAN COUNTRIES UNDER 3 CRITICAL VARIABLES

COUNTRY OVERALL PROSPERITY RANK AVERAGE LIFE SATISFACTION
(IN PER CENT)
PERSONAL SAFETY
(IN PER CENT)
Pakistan 107 58 40.8
Iran 97 51 56.5
Bangladesh 95 49 78.6
India 91 50 59.7
Turkey 75 55 59.5
Indonesia 70 55 80.8
Sri Lanka 63 40 71.1
China 52 47 80.1
Malaysia 43 55 42.2
Japan 21 61 69.1