There is a profound sense that the liberal world order of the last 70 years or so is eroding, with the rise of China, Russia continuing to push its weight, and nationalism on the rise in nations as diverse as the United States and Hungary.

It’s not all negative however, as the annual Prosperity Index from the Legatum Institute suggests that the last decade has seen economies actually become more open, with every region of the world showing improvements, especially in areas such as market access and infrastructure.

The rosy picture continues with signs that the global investment slump we experienced between 2009 and 2014 has ended, with this joined by strengthened property rights, investor protections and contract enforcement.  This has coincided with a rise in living conditions, health and education around the world, with the report suggesting they’re all now at their highest ever levels.

“Contrary to the common assumption that wellbeing is deteriorating, our Index shows that actually global prosperity is improving meaning millions of people now have the opportunity to flourish,” the authors say. “While there are still significant challenges facing many countries, there is a clear reason to celebrate the achievements that have been made around the world.”

Stagnating institutions

The authors believe that greater gains could be made if institutions were not holding progress back.  For instance, there has been a noticeable decline in the area of inclusivity, especially in the Middle East and North Africa.

There has also been a decline in governance around the world, with deterioration in personal freedoms such as the freedom to speak, assemble and associate.

Despite this, the report suggests that social capital has generally improved across the world over the last decade, with a growth in trust in institutions such as the police force and judiciary.

“There is a fundamental relationship between strengthening institutions and broader economic and social development. This is highlighted in the Index and is also something we’ve seen through our work this year focusing on both the African continent and the United States, where the importance of institutions underpinning social wellbeing is particularly evident,” the authors continue.  “The findings of the Index have also reinforced our belief that the strength of personal and social relationships, social norms, and civic participation is an inherent and essential component of a prosperous society. It demonstrates the vital importance of viewing prosperity holistically to create an environment in which everyone can reach their full potential.”

Ranking highlights