Improvement in Global Business Environment
The Legatum Institute, a global think-tank and educational charity whose main purpose is to promote policies that would help create pathways from poverty to prosperity, has shared its findings about global prosperity for 2018.
Through the Legatum Prosperity Index, created to provide informative, transparent, and useful information about the prosperity standing of 149 participating countries, significant data that may be instrumental in crafting policies and programs to help advance global progress is revealed.
In this index, nine pillars serve as the basis for analyzing the countries included in the survey. These pillars provide a methodological metric to offer a unique insight into how prosperity is evolving across the globe.
Pathways to Prosperity
The nine sub-indices from where each country is rated on are:
- Business Environment
- Economic Quality
- Natural Environment
- Personal Freedom
- Safety and Security
- Social Capital
Equal assigned weights are assigned to each pillar for each country. This determines their Index score and rankings.
According the report shared by the Legatum Institute, every region in the world has seen a rise in the business environment pillar in the past year. The biggest gainers compared to their scores ten years ago are the regions of Asia, Eastern Europe, and Sub-Saharan Africa. The latter, in particular, has experienced the biggest leap in terms of ease of starting a business.
Prosperity Pillar: Business Environment
A country’s business environment is a critical factor in determining its level of prosperity. Strength in this area helps stimulate and grow an entrepreneurial climate, paving the way for the pursuit of new ideas and opportunities. This, in turn, results into more wealth and improved social wellbeing.
Overall global prosperity in 2018 has recorded and all-time high, with the median score moving up 15 places since 2007. The biggest contributor to this prosperous rise is the improvement in the global business arena.
Enhanced entrepreneurial environments, better protection for investors in terms of insolvency procedures and property rights, and improved business infrastructure were instrumental in making it easier to conduct business worldwide.
Other factors also include access to credit, an assessment whether individuals or businesses can secure credit at affordable rates to be able to finance their ideas, have certainly fostered entrepreneurship.
Flexibility of the labor market is also a noteworthy aspect in promoting a rosy business milieu. In this aspect, the ability to adapt to new challenges or changes by employing or losing people without being hindered by costs and regulations are measured. Countries are assessed based on indicators such as the perceived regulatory obstacles to hiring and firing and redundancy costs in weeks of salary.
In Focus: Asia, Europe and Sub-Saharan Africa
A robust business environment has helped the Asia-Pacific to become the fastest growing region over the last ten years. According to the Legatum Institute, this rise also continued last year with improvements in credit access and investor protection as the main drivers.
Overall, the Asia-Pacific region ranks fifth in the Prosperity Index but ranks third in the Business Environment pillar. Other major contributors to its unprecedented growth are a rise in the both its Economic Quality and Governance pillars. The stellar growth in these pillars is vital to attaining economic wellbeing. China and India are two countries that best exemplify this massive upsurge in economic wellbeing due to the large numbers of people lifted out of poverty, swift economic growth, and a steady rise in index rankings since 2007.
Europe, especially the Eastern region, has also seen a rise in its prosperity score in the Legatum Index. Eastern European regions have been progressing in a swift and steady pace, with last year’s numbers indicating the second largest increase for any region.
While the region has collectively advanced in prosperity growth in the past decade, the drivers vary across the region. The “industrial hinterlands” made up of the Czech Republic, parts of Hungary, parts of Poland, Slovakia, and Slovenia are the most prosperous zones due mainly to the automotive production industry.
It is also worth to train the spotlight onto the Sub-Saharan Region where growth has been rising steadily. While the rise is not meteoric, it is noteworthy to mention that 35 countries in the region have charted an upsurge in their prosperity scores in the past ten years.
In particular, Malawi and Cameroon were the largest risers in the pillar rankings. Rwanda also put itself on the charts as having the largest improvement in the Business Environment pillar, thanks to improvements in access to credit, time needed to start a business, and strengthened protections for investors.
The Road to Rewards
These unique insights into the prosperity status of each country give people a chance to see where a country and its people are headed supported by evidence-based data. With such data available, policy-makers and world leaders has a powerful tool that they can use to instigate action and implement programs for positive change.
The index data aims to provide a broad picture of how a country and its people can flourish. By describing the conditions and combinations needed for a country to prosper, people will have a credible benchmark on how to chart their path towards a prosperous, more rewarding life.