Finland is world's most prosperous nation

November 7, 4:12 AMGeopolitics ExaminerMichael Hughes

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Finland is ranked at the top of the 2009 Prosperity Index, a global assessment of the wealth and well being of 104 countries conducted by the Legatum Institute, a U.K.-based economic and political think tank. The study, released last week, is based not only on material wealth but scores are also driven by quality of life metrics.The United States is ranked 9th overall, surpassed by 6 EU nations along with Australia and, yes, Canada. The United States is ranked 1st in entrepreneurship and innovation and 2nd in the world in democratic institutions – bested only by Switzerland. Yet, the U.S. overall tally is dragged down because of its 27th ranking in the health category.

Methodology
There are many experts and economists who believe that gross domestic product, taken alone, is not a sufficient measurement of well being because GDP does not capture key subcategories such as health, personal freedom and security. Well, the Prosperity Index is the solution to this dilemma – or at least a step in the right direction.

Each country’s score is derived from 79 variables across 9 sub-indexes referred to as the "building blocks" of prosperity which include: (1) Economic Fundamentals, (2) Entrepreneurship and Innovation, (3) Democratic Institutions, (4) Education, (5) Governance, (6) Health, (7) Personal Freedom, (8) Safety and Security, and (9) Social Capital (e.g., volunteerism, societal trust, religious involvement, life satisfaction, community organizing, etc).

Each category score was calculated from key performance indicators and data from global surveys and polls. For example, harder quantifiable metrics such as GDP, domestic savings, and unemployment were used to calculate scores that determined each country’s economic fundamentals category ranking. But for a category such as personal freedom, qualitative polls were employed, including surveys that subjectively measure satisfaction with freedom of choice, speech and religion, tolerance for immigrants, and tolerance for ethnic minorities.

Below are the overall rankings of the top ten most, and least, prosperous nations:

Top Ten Most Prosperous Nations
1. Finland
2. Switzerland
3. Sweden
4. Denmark
5. Norway
6. Australia
7. Canada
8. Netherlands
9. United States
10. New Zealand

Bottom Ten
95. Kenya
96. Algeria
97. Tanzania
98. Nigeria
99. Pakistan
100. Cameroon
101. Central African Republic
102. Yemen
103. Sudan
104. Zimbabwe

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FINLAND

Sub-Index Rankings
Economic Fundamentals – 10th
Entrepreneurship and Innovation – 9th
Democratic Institutions – 9th
Education – 3rd
Health – 7th
Safety and Security – 2nd
Governance – 3rd
Personal Freedom – 7th
Social Capital – 6th

Finland - Governance: Trustworthy leaders produce effective government
An overriding factor in the Finnish success is that its citizens have high levels of confidence in their government, which they perceive as fair, effective and trustworthy – which might be the biggest key to their success. Finland has the lowest rates of perceived corruption of any other country: 94% of Finnish citizens have confidence in the honesty of elections, only 13% of people believe their government to be corrupt, and 80% of the citizenry have expressed faith in the judicial system. Finland’s government is ranked 7th in effectiveness, and in the top ten in rule of law and regulatory equality. The chicken and the egg question remains: Does Finland’s governmental structure breed effective and trustworthy leaders, or does Finland inherently produce respectable leaders who deliver respectable results?

Finland: Safety and Security
Incidences of state-sponsored violence or repression of citizens in Finland are the lowest in the world, civilians’ perceptions of their own safety are strong, with 81% feeling safe to walk alone at night, and only 2% having claimed to have been assaulted in 2007.

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UNITED STATES (9th)

Sub-Index Rankings
Economic Fundamentals – 14th
Entrepreneurship and Innovation – 1st
Democratic Institutions – 2nd
Education – 7th
Health – 27th
Safety and Security – 19th
Governance – 16th
Personal Freedom – 8th
Social Capital – 7th

U.S. - Economic Fundamentals
The U.S. consumption economy is highlighted in the assessment as well as the American consumer’s penchant for not saving money. U.S. household spending is the highest in the world as a proportion of GDP, although domestic savings rates are only 14% of income, which puts the U.S. at 82nd in the world.

U.S. - Health
The U.S. health score is not commensurate with its wealth ranking, driven by lower life expectancy than a number of top industrialized nations. It is 37th in doctors per capita, and received a 60th ranking in overall health satisfaction. In addition to Canada’s overall higher ranking than the U.S., ironically, considering the recent publicity about how poor Canada’s healthcare system is, our neighbors to the north also have a higher health ranking at 22.

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OTHER COUNTRIES OF CONCERN
Pakistan, the U.S. strategic ally in the war against terror, is ranked near the bottom in the 99th slot, which makes them the sixth least prosperous nation in the world, driven by the fact that they are one of the least safe places on earth, and the fact that personal freedom is virtually nonexistent. U.S. economic rival China is ranked 75th, military rival Iran is 94th, and Russia is 69th.

PAKISTAN (99TH)

Sub-Index Rankings
Economic Fundamentals – 70th
Entrepreneurship and Innovation – 79th
Democratic Institutions – 79th
Education – 101st
Health – 87th
Safety and Security – 101st
Governance – 81st
Personal Freedom – 104th
Social Capital – 36th

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CHINA (75th)

Sub-Index Rankings
Economic Fundamentals – 29th
Entrepreneurship and Innovation – 38th
Democratic Institutions – 100th
Education – 64th
Health – 53rd
Safety and Security – 65th
Governance – 93rd
Personal Freedom – 91st
Social Capital – 70th

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RUSSIA (69th)

Sub-Index Rankings
Economic Fundamentals – 39th
Entrepreneurship and Innovation – 42nd
Democratic Institutions – 85th
Education – 28th
Health – 46th
Safety and Security – 99th
Governance – 85th
Personal Freedom – 88th
Social Capital – 84th

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IRAN (94TH)

Sub-Index Rankings
Economic Fundamentals – 79th
Entrepreneurship and Innovation – 69th
Democratic Institutions – 93rd
Education – 59th
Health – 70th
Safety and Security – 88th
Governance – 102nd
Personal Freedom – 101st
Social Capital – 82nd

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Some would suggest that something must be said regarding order of magnitude. A massive country like the United States, with over 300 million people, probably presents more challenges to elected officials than running a country with 5 million folks, as in Finland’s case. With more people come more opportunities for crime, corruption, poverty, and illness. Not only must Federal government programs be effective, but they must be scalable and implementable. Thus, I agree, pure size does place restrictions on larger countries. Of course, size is a two-way street. With size come economies of scale, access to more raw talent, and more opportunities for innovation. Yet, regardless of size, shape or color, one conclusion that most would agree upon is that the most consistent ingredient among all successfully prosperous countries is freedom.