Ben Aris in Moscow -
Despite its current financial woes, Slovenia is the most prosperous country in Emerging Europe, according to the latest annual prosperity index from the Legatum Institute.
While income is an important part of prosperity, the institute has broadened the definition to take into account of some of the non-material things that make life worth living, as defined in sub-indices such as "Safety & Security", "Personal Freedom", "Social Capital", "Education", amongst others.
"Traditionally, a nation's prosperity has been based solely on macroeconomic indicators such as a country's income, represented either by GDP or by average income per person (GDP per capita)," the institute says on its website. "However, most people would agree that prosperity is more than just the accumulation of material wealth, it is also the joy of everyday life and the prospect of being able to build an even better life in the future."
"The Prosperity Index is distinctive in that it is the only global measurement of prosperity based on both income and wellbeing," it adds.
The US may be the richest country in the world, but it ranks a poor 11th out 149 countries in Legatum's Prosperity Index, and has fallen out of the top 20 in the sub-category that measures economic prosperity. Norway, on the other hand, was ranked the most prosperous country in the world this year for the fifth time in a row.
The index found that global prosperity continued to increase this year, but that the developed world is improving more slowly than the developing world. Germany has recorded the highest increase in overall prosperity since 2009, but most of the rest of Western Europe bucked the trend and has seen its prosperity fall for two years in a row.
However, following on close behind Germany as the fastest improvers are the new EU members from Emerging Europe. "The evidence indicates that many of these states are becoming increasingly entrepreneurial, helping them to improve their level of overall prosperity," the institute said in its report, released October 29. "This could presage a change in the landscape of European prosperity over time."
Slovenia is the standout winner in Emerging Europe in this year's index, retaining its ranking as the 24th most prosperous country in the world and putting it head and shoulders above all the other countries from the region. It has the highest per-capita income at $27,474 and scored best with the "Education" (9th) sub-index. But given its current financial crisis, unsurprisingly it scored worst in the "Economy" (53rd).
There are other surprises. Czech Republic may be mired in political turmoil and a stubborn economic downturn, but it beat out the foreign investors' darling of Poland (34th) to be the most prosperous country in Central Europe (29th). It does best in the "Safety & Security" sub-index (23rd), but worst in "Personal Freedom" (50th)
It will come as no surprise that Kazakhstan was ranked the most prosperous country in Central Asia, and it may surprise that its 47th place in the ranking also puts it ahead of the laggard in Central Europe, Latvia (48th), as well as all the other former Soviet countries in Eastern Europe, including Russia (61st).
Indeed, the biggest surprise in Eastern Europe is that Belarus is ranked higher than Russia in 58th place, thanks to the more diversified and manufacturing-oriented nature of its economy, which favours workers over the handful of super-rich Russian oligarchs that dominate Russia's economy.
Russia's per-capita income of $23,501 is the second highest in the region, ahead of Poland's $22,162, Turkey's $18,348 and Kazakhstan's $13,916. But despite the oil wealth, Russia scores badly in several categories: it does best on "Education" 26th, and middling on "Entrepreneurship & Opportunity" (Russia has more billionaires per capita than any other country) and "Health", where it ranks 47th and 44th respectively. But it comes as no surprise it does worst on "Governance" (115th) and "Personal Freedom" (114th). That said, Russia remains more prosperous than the rest of Central Asia and all of Southeast Europe bar Slovenia, Croatia (53rd) and Romania (55th).
Perhaps the biggest surprise is how badly Turkey, which has been the doyen of the region as far as investors are concerned for the last two years, does on the Prosperity Index. Its 87th position is better than only Tajikistan (94th) and Armenia (95th) in the entire Central and Eastern European/Commonwealth of Independent States region. Even Uzbekistan (63rd) is found to be more prosperous than Turkey by Legatum's definition.
Turkey does well-ish on "Entrepreneurship & Opportunity" (54th) and "Governance" (50th), but does poorly on nearly everything else: what really drags it down is the extremely low scores for "Personal Freedom" (130th) and "Social Capital" (128th).
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