While historic definitions of prosperity often equate it with financial success, modern interpretations of the term are more all-encompassing, reflecting not just whether a country is high- or low-income, but that country's overall quality of life and level of human development. One well-respected measure of prosperity is the Legatum Prosperity Index, an annual ranking developed by the Legatum Institute. Launched in 2007, the Legatum Prosperity Index ranks 167 of the world's countries and territories across 104 different variables in twelve categories including health, education, personal freedoms, safety and security, and the business environment.
The most prosperous countries in the world have high levels of personal freedom, safety and security, education, and health. These countries also have healthy natural environments and conditions that promote economic prosperity through features such as protection of investments, favorable business regulations, and a healthy market infrastructure.
Top 10 Most Prosperous Countries (Legatum Prosperity Index 2021):
Top 10 Least Prosperous Countries (Legatum Prosperity Index 2021):
- South Sudan
- Central African Republic
- Yemen
- Chad
- Afghanistan
- Eritrea
- Somalia
- Democratic Republic of the Congo
- Sudan
- Syria
Categories of the Legatum Prosperity Index:
- Safety and Security — Tracks the impact on war, terror, conflict, and crime on individuals' overall security in both the short and long term.
- Personal Freedom — Tracks basic legal rights, individual liberties, and social tolerance within a country's society and legal system.
- Governance — Measures government corruption and effectiveness; examines checks and balances on governmental power.
- Social Capital — Tracks civic participation, social norms, institutional trust, and strength of personal and social relationships.
- Investment Environment — Tracks the availability and security of financial investments.
- Enterprise Conditions — Measures environment and options for businesses to launch, expand, and remain competitive.
- Infrastructure and Market Access — Measures strength of commerce system and tracks distortions in trade market for goods and services.
- Economic Quality — Measures economy's ability to engage the full available workforce and generate sustainable wealth.
- Living Conditions — Measures overall quality of life by tracking availability of shelter, basic services, internet connectivity, and material resources.
- Health — Measures availability of health services, mortality rate, risk factors and rates of illness, and health outcomes.
- Education — Tracks enrollment across all levels (preschool through tertiary education) and skill sets in adult population.
- Natural Environment — Measures the portion of the environment that directly impacts daily life and could influence the prosperity of future generations.
Individual Country Profiles:
1. Denmark
Denmark overtook Norway to assume the title of most prosperous country in the 2019 rankings and has yet to relinquish it. In the 2021 report, Denmark ranked first for Social Capital, second for both Personal Freedom and Governance, and third for Education and Living Conditions. Denmark is also one of the happiest countries in the world and ranks high on the Global Peace Index each year. Denmark displays a high level of equality and a strong sense of responsibility for social welfare—two things that contribute to both Denmark’s happiness and its safety. Additionally, Denmark experiences very little corruption in both politics and business, which contributes to its high ranking for governance.
2. Norway
Ranked as the world's second-most-prosperous country, Norway ranks first for Personal Freedom, and Safety & Security. Only Denmark has a higher Social Capital ranking, and Norway also ranks third in Governance and fourth in Health. Like Denmark, Norway is a welfare state that takes care of its citizens, such as providing health insurance and education subsidies. Like Denmark and Switzerland, Norway's annual score on the Human Development Index (HDI) ranks among the world's highest, thanks in part to high life expectancies, generous per capita income, and a strong education system.
3. Sweden
Number three on the 2021 Legatum index, Sweden is another of the world's most well-developed nations. The country ranks first for the Natural Environment, third for Personal Freedoms and fifth for both Social Capital and Living Conditions. Sweden has a high life expectancy of 82.7 years and free access to health care for all of its citizens. Sweden’s economy is highly competitive and diverse, and typically maintains a trade surplus and very low unemployment rates.
4. Finland
Finland ranked first for Governance in 2021 and second in Natural Environment. One of the most environmentally friendly countries in the world according to the Environmental Performance Index, Finland ranks high for environmental health, air quality, and water and sanitation. Finland also ranks third for Social Capital and Investment Environment.
5. Switzerland
Fifth on the 2021 Legatum index, Switzerland ranks first for Economic Equality and second for Safety & Security. Switzerland is one of the most developed nations in the world according to the HDI and possesses an excellent healthcare system, granting its citizens a life expectancy of 83.6 years. Switzerland is known for having strong infrastructure and institutions, as well as a very strong overall growth outlook. Additionally, Switzerland has a beautiful natural environment and is considered one of the world's most environmentally friendly countries.
6. Netherlands
The Netherlands is sixth on the 2021 Legatum index, but ranks first in the world for Living Conditions. Netherlands also ranks second for Infrastructure and Market Access, fourth for Governance, and fifth for Personal Freedoms. The Netherlands ranks as one of the world's largest exporters of goods and displays a very high quality of life with high levels of education, low unemployment, and a healthy work-life balance.
7. Luxembourg
Luxembourg is the seventh country on the 2021 Legatum index. Luxembourg ranks second for Economic Quality and third for Safety & Security. Luxembourg’s GDP is growing fairly quickly and the country enjoys the highest per-capita GDP in the world. Additionally, Luxembourg is a very safe country with little crime, few of which are more severe than petty theft.
8. New Zealand
New Zealand stands out as a reassuringly stable place of economic, political, and social stability. New Zealand ranks fourth for both Social Capital and Natural Environment, as well as fifth for Governance and sixth for Enterprise Conditions. The country’s political stability and effective governance have translated to stable economic conditions. New Zealand values the contributions that entrepreneurs and investors have made toward the development of its economy and consistently invests in infrastructure to support them.
9. Germany
Germany ranks ninth overall on the 2021 Legatum Prosperity index. Germany placed highest in the Living Conditions category, where it ranked second in the world, and also ranked fifth in Infrastructure and Market Access. Germany's economy is the strongest in Europe and one of the largest in the world. Germany is known for being one of the most innovative and technologically-advanced countries in the world, exporting automobiles, pharmaceuticals, electronics, and machinery. Additionally, living conditions are very favorable for German citizens, who benefit from universal healthcare coverage.
10. Iceland
Iceland is the tenth most prosperous country on the Legatum index and ranks sixth for both Safety & Security and Social Capital, which includes relationships, social norms, and civic participation in the country. Iceland is known for its social stability and equality among its people, with little tension between social and economic classes. Iceland has a mixed economy that is well developed and capitalist but also supports a welfare state, providing universal health care and tertiary education for its citizens. Additionally, Iceland ranks high for safety and security and personal freedom. Iceland is considered one of the safest countries in the world, to the extent that the country does not assign personal firearms to its police forces.