New Zealand a Prosperity Index Success Story

While Greece, Spain and Portugal face a bleak scenario as they struggle on their road to recovery New Zealand, Canada, America and Britain emerge from the Legatum Institute’s Prosperity Index as success stories, Newsweek reports.

“The Index shows clearly the winners and losers since the 2008 financial crash. By considering education, health, safety and security, personal freedom and social capital in each country, as well as economic sub-indices, the Index measures a country’s real performance.

“The report illustrates the success stories since 2008 – New Zealand, for instance, which has risen to No 3 in the Prosperity Index. Even as the country slid into recession, New Zealand was investing in R&D far beyond its economic weight and the government was lowering start-up costs and improving the regulatory environment. Today the country ranks second on the World Bank’s measure for ease of doing business. Yet its economic success is rooted in social resources that were already high as the crisis started but grew after 2008.

“Britain produces an average 9.5 new businesses per 1000 people per year and New Zealand about 20. In the UK it only costs US$125 and in New Zealand it costs US$107.

“As a percentage of GDP, New Zealand’s government collects almost the same amount of tax as Spain, Portugal and Greece, but the Mediterranean countries do this with far higher tax rates.

“No one may be paying tax, but that doesn’t mean that they are not working. Greece, Portugal, Spain and Italy all have large ‘shadow economies’. The shadow economy refers to economic activity that is not inherently illegal but is unreported or undeclared. It ranges from sole traders not declaring earnings to large firms that under-report profits. A World Bank paper estimated that Greece’s shadow economy is worth around 26.5 per cent of GDP, Italy’s is worth 26.8 per cent, Portugal’s is worth 23 per cent and Spain’s is worth 22.2 per cent. Contrast this with the United States, which has a shadow economy of around 8.4 per cent of GDP, or the UK and New Zealand, with shadow economies of around 12 per cent of their GDP.

“In 2008, the average New Zealander was poorer than the average Greek, and a great deal poorer than the average Spaniard and Italian. Its ‘sorpasso’ of those nations bears out the Prosperity Index findings, that a government determined to promote prosperity needs to invest in social capital and innovation.”

Original article by Sarah Fink, Stephen Clarke, Cristina Odone, Newsweek, June 18, 2015.

Photo by Fraser Clements.

 


Tags: 2008 financial crash  GDP  Greece  Legatum Institute  Newsweek  Prosperity Index  shadow economy  World Bank  

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