The Prosperity Index
A recent report from the Legatum Institute, a think-tank based in London and Washington, has pointed up some of these challenges. Legatum produces a regular ‘prosperity index’ that rates countries not only on how wealthy they are, but also on measures on how satisfied citizens are with that wealth, using indicators based on opportunity, governance, education, health, safety and security, personal freedom and social capital.
The index adds together quantitative data on things like income, health, education and crime, and adds to them subjective data on how people see their lives and their futures, through the answers to questions about confidence in the judicial system and elections, expectations as to whether life is getting better or worse, and whether people are happy, confident, or worried.
The results give a picture not only of where a society and an economy is today, but also about where its citizens think it is going. As with all such rankings, the outcomes depend on how the different results are weighted – but unusually, the Legatum report allows readers to change the weightings if they wish to do so (anyone can do this on the Prosperity Report website at www.prosperity.com).
A recent special Prosperity Report on Africa addresses the question of which African nations will be best placed to handle the growing prosperity expectations of a demographically young Africa. The report concludes that most African economies will profit from the ‘demographic dividend’ – but that some are at risk of failing to deliver the growth that a young population is certain to demand.
The biggest challenge that African economies will face in the near future is simply creating enough jobs to keep young populations in work. Unemployment has been a long term-challenge for sub-Saharan Africa – according to the International Institute for Labour Studies the region has a long-term unemployment rate of 35%, very much higher than unemployment rates in developed economies.
As more young people enter the job market, in many cases with higher educational attainments and higher expectations than would have been the case in the past, it seems likely that such high unemployment rates will not be sustainable. If jobs are not created to bring unemployment levels down closer to the 10% or less enjoyed by developed economies, the likely result will be unrest on the streets: as the Prosperity Report points out, if governments cannot deliver very high annual GDP growth, then as working age populations grow, unemployment will also start to grow from its already high levels.
The other great challenge will be to continue to deliver the kinds of improvements in healthcare and life expectancy that have already been achieved over the last 20 years.