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LatinNews Daily Report - 4 November 2014

Prosperity Index 2014

LatinNews is excited to announce a new partnership with the Legatum Institute, a London-based public-policy think-tank that produces the highly regarded Prosperity Index, the 2014 issue of which launches this week.

Subscribers to LatinNews will enjoy strong added-value from this collaboration, combining our deep understanding of Latin America and the Caribbean, gained over nearly 50 years of engagement in the region, with the broad range of socio-economic data provided by the Legatum Institute. Watch for our upcoming special focus in the next Latin American Economy & Business report, in which we use the latest Prosperity Index data to examine whether the recent gains in living standards in many Latin American countries are sustainable following the end of the recent commodity boom.

The Legatum Institute’s Prosperity Index uses rigorous research and in‐depth analysis to rank countries based on their performance in eight sub‐indices—Economy, Entrepreneurship & Opportunity, Governance, Education, Personal Freedom, Health, Safety & Security and Social Capital.

The 2014 Index reveals that globally, Norway is the most prosperous country for the sixth year in a row, retaining its place thanks to its high ranking in the Economy (3rd), Health (5th), Education (5th), Governance (7th), and Personal Freedom (2nd) sub-indices. The US ranks 10th overall, and the UK 13th, the most prosperous of all the leading major European Union nations, coming ahead of Germany (14th), France (21st), Spain (26th) and Italy (37th).

Among Latin American and Caribbean countries, Uruguay, Chile and Costa Rica are ranked the most prosperous at 30th, 33rd and 34th respectively. At the other end of the scale sit Venezuela, Honduras and Haiti, at 100th, 105th and 135th. Raw changes in rank from year to year must be viewed in context. As more countries are added to the Index (32 were added in 2012), some countries slip down a place or two as the table grows, but the relative annual ranking is a very useful metric in itself, and the addition of new countries does not account for big falls and gains. Venezuela, for example, has slipped 22 places since 2013, while other countries in the same portion of the table have moved about far less (Haiti, the worst performer in Latin America, has dropped just one place since last year).

Interestingly, the 2014 Index ranks Argentina (relatively) highly, at 46th globally. Despite performing poorly in the Economy (54th), Entrepreneurship & Opportunity (55th) and Social Capital (53rd) indices, and extremely poorly in terms of Governance (97th), it is performing better in Education (44th), Health (42nd) and Safety & Security (47th), and does well in terms of Personal Freedom (30th).

This puts Argentina ahead of the region’s two largest economic actors, Brazil and Mexico, which achieve global rankings of 49thand 64th respectively. Of course the data, while useful, only tell half the story. Without the contextual understanding that LatinNews provides, the raw numbers can be misleading. Key findings in the Index that might indicate an important trend such as an economic improvement, for example Ecuador’s Economy indicator, which has gone from 55th in 2012, to 54th in 2013, to 47th this year, do not explain the drivers of this change, nor the potential fragility of the country’s growth. Similarly, the data show that Bolivia’s Economy indicator has travelled the other way, slipping from 44th to 46th to 51st over the same period. Again, this raises questions for further discussion, and LatinNews is perfectly positioned to answer them.

LatinNews has been an acknowledged authority on Latin America and the Caribbean since 1967, and our new partnership with the Legatum Institute supplies us with an extra tool to help us provide our subscribers across government, business and academia with the crucial and timely analysis they need.

Latin America: Country Rankings

From left (best) to right (worst)

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Latam Ranking

Source: Own presentation of Prosperity Index 2014 data

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