Prosperity

This map of the Legatum Prosperity Index gives a good summary of what macroeconomists mean when they talk about rich and poor countries, or developed and developing countries.

I believe this is for 2013 (or 2012): for later years I couldn’t find the map in a standalone form. You can go to prosperity.com where they have interactive versions if you want greater detail.

This hits the right notes though. The dark countries are rich and/or developed. This is the U.S. and Canada, western Europe, Australia and New Zealand, and Japan and South Korea. South Korea is the newest addition to the list. Singapore is probably on there, but too small to see. Taiwan should be on there, but China bullies them, lowering some scores. Israel would be on there, but gets marked down for safety and security due to terrorist threats and actions. They’ve put a couple of Persian Gulf countries in this group, which is OK, but I wonder if the whole society there feels like they’re living in a developed place. Lastly there’s Uruguay. This country is doing OK, but that shading is driven a lot by huge decreases in the enforcement of drug laws there over the last few years. I’m not against that, but I think it might be overrated. I think Chile is better developed top to bottom. Italy probably should be included in the dark blue group; this may be an effect of the poorer southern parts outweighing the richer northern parts.

The light blue is the countries that are doing pretty well. The orange countries, not so well. The red ones are doing poorly.

And don’t forget about the gray countries. They’re labeled as “No Data”. Typically this means they don’t collect or don’t report the data that underlies this index. Often, this is because of mismanagement: if you’re a kleptocrat, no one can tell what you stole if no one is measuring it. So some of these are places that just don’t cooperate with anyone (like North Korea and Cuba), kleptocracies (like Myanmar/Burma, or Turkmenistan), some are failed states (like Somalia and LIbya), some are too new (like South Sudan or Papua New Guinea), and some are still colonies (like Greenland, or Western Sahara).

N.B. There’s a statistical fact that you can’t rank, say, n items if you have less than n pieces of data. The most familiar example of this is college football rankings; who’s the best if South Florida beats Notre Dame, Notre Dame beats Michigan State, and Michigan State beats South Florida (this is the example that I found with many seconds of searching on the google, but it happens a lot). We also see this in things like U.S. News and World Report’s famous ranking of colleges. And we see it in things like this prosperity index. We work around that by assigning weights to the different components, and then taking a weighted average. The thing is, if a different person makes up the weights, it can yield a different ranking. Just keep in mind that you’re really looking for plausibility, rather than definitiveness. So, when I say Israel should be higher and Uruguay should be lower, that’s a personal opinion … but don’t presume that the numbers say that’s not correct just because we used one websites weights.