The Index defines prosperity as a holistic combination of material wealth and life satisfaction, measuring how well nations are promoting both economic growth and quality of life. Yemen ranks last, following several African nations including Zambia and Zimbabwe.

The top ten countries in the Index represent multiple regions including five European countries (Austria, Denmark, Finland, Germany and Switzerland), four from the Asia Pacific region (Australia, Hong Kong, Singapore and New Zealand) and one from North America (United States).

The Prosperity Index assesses 104 nations around the world by measuring 44 different indicators of both economic competitiveness and liveability. Australia leads the Index because of its strong performance in education, governance, and promoting entrepreneurship. It has reinvented itself as a wealthy service-oriented economy with good scores on liveability indicators, including health, charitable giving and effective governance. Strong norms of civic participation, robust health, and plenty of leisure time contribute to the high liveability rating.

Austria scores highly in education, which is vital to long term income growth, as well as health, a key to quality of life. Looking at the promotion of entrepreneurship as a driver of economic competitiveness, Austria has one of the lowest rankings in the top ten.

Finland boasts of high governance, helping to drive both wealth and wellbeing in the country. In addition, the Finns report very high levels of satisfaction with the freedom to choose the course of their own lives.

This group of countries tops the Index because of imbalanced results from other world regions. Several Nordic countries score very well on liveability indicators, but poorly on some wealth drivers, most notably in the promotion of entrepreneurship. Many Asian countries on the other hand, score well on the economic competitiveness indicators, but have comparative weaknesses in liveability, including limited equality of opportunity for women, a degraded natural environment, and long working hours.

While no country has poor scores in every category, Yemen comes closest. While its people maintain a strong religious faith, they also suffer from extreme levels of poverty and poor governance. For most of the countries in the bottom ranks of the Index, extreme poverty appears to be the main cause, which further impacts wellbeing by contributing to ill health and unemployment. A number of countries, such as Zimbabwe and Sudan, are both impoverished and politically repressive.

Dr. William Inboden, Senior Vice President of the Legatum Institute commented that: “true prosperity consists of more than money. It also includes happiness, health, and liberty. The Prosperity Index shows that in addition to economic success, a society’s prosperity is based on strong families and communities, political and religious liberty, education and opportunity, and a healthy environment.”

All successful countries demonstrate several common attributes, with the top ten scoring especially high on five economic indicators:

• Growth in Invested Capital;
• Good Governance on economic issues;
• Commercialising Innovation;
• Good Governance on political issues;
• High Incomes.

All but Singapore and Hong Kong scored nearly as well on community life and family life indicators, which are important measures of Social Capital. Conversely, the bottom 25% of the Index countries get especially low marks on the above indicators as well as Freedom of Choice. They are particularly burdened by low incomes and high dependence on foreign aid.

The 2008 Prosperity Index finds that both individuals and governments have a role to play in promoting national prosperity. Alan McCormick, a Managing Director at Legatum, observed: “The 2008 Legatum Prosperity Index reveals that governments alone cannot mandate prosperity, but they can foster an environment that encourages prosperity through implementation of wise policies. Individual citizens are responsible for taking ownership of their lives and, in richer countries, embracing the opportunities that accompany increased freedom and privilege.”

Mr McCormick concluded that: “Amidst widespread global economic insecurity, the findings of this year’s Index could not be timelier. The Prosperity Index is a manifesto for advancing long-term national prosperity which can act as a guide for leaders from all sections of society.”

The top twenty countries in the Legatum Prosperity Index as are follows: (1) Australia, (2) Austria, Finland, (4) Germany, Singapore, United States, (7) Switzerland, (8) Hong Kong, (9) Denmark, New Zealand, (11) Netherlands, (12), Sweden, (13) Japan, (14) Belgium, Canada, France, Norway, United Kingdom, (19) Israel, (20) Ireland.

The worst ten countries in the Index as as follows: (94) Sudan, (96) Kenya, Mozambique, (98) Nepal, (99) Zimbabwe, (100) Tanzania, (101) Central African Republic, (102) Mali, Zambia, (104) Yemen.