Prosperity

How do we measure a nation’s prosperity? How does the Philippines fare?

Despite the difficulties defining prosperity, Legatum Institute, a group based in the United Kingdom, has been ranking countries since 2007 with complicated sets of measures.

But let me backtrack a bit and talk about how this Prosperity Index is just one of several responses to tackling something even more basic: What is development?

Generally, nations’ development levels are still measured mainly by gross national product, or the total value of goods and services produced. Similar measures are the gross national income, and gross domestic product, which are different from GNP but still emphasize economics.

These measures have been questioned for its exclusion of the informal economy (for example, street vendors) and of household work.

In 1990, the UN Development Program adopted the Human Development Index (HDI), which sought to go beyond economic growth alone and incorporated life expectancy at birth, average years of schooling for adults and expected years of schooling for children, and the gross national income per capita.

I followed the HDI rankings through the years, seeing how the Philippines was overtaken by our neighbors.

Then I found this Prosperity Index, which is based on nine pillars: economic quality, business environment, governance, personal freedom, social capital, safety and security, education, health and natural environment. Each pillar has a number of variables, for example economic quality has subpillars like antimonopoly policy, ease of trade, economic inclusiveness.

I’m planning to use this Prosperity Index in my research methods class to show how abstract concepts like personal freedom can be made concrete and measurable.

The conceptual basis for the Prosperity Index is also intriguing, shown in a visual graphic that shows two wheels: economic prosperity and social well-being, each driving the other. As a nation (or a household) accumulates economic resources, it has more to put into health and education. But it is not enough to have financial capital; you also need social well-being generated by social capital.

Social capital involves the building of social networks and because it is not a familiar term, I’m going to list all the subpillars used in the Prosperity Index: donations, having someone to rely on when you need help, willingness to help a stranger, financial assistance to another household, opportunities to make friends, treating people with respect, voicing one’s opinion to public officials, doing volunteer work, voting in elections and, this one made me smile, confidence in the local police.

Even more intriguing in the conceptual chart, in the center of the two wheels, is “the pursuit of virtue” especially by a nation’s leadership. Morality, trust and a service-orientation constitute “virtue.” This pursuit of virtue is not itself measured, but is supposedly reflected in the various outcomes.

The Prosperity Index gives us not just something to boast about but an incentive to further improve our strengths. The rankings across countries also provide us with warnings on how a country’s Prosperity Index can quickly drop.

So, what’s the good news?

We rank 62nd among 149 countries, higher than Thailand (74th), Vietnam (81st) and, would you believe, China (82nd)?

Our fairly good overall ranking comes from our high scores in various social capital measures (social norms and personal and social relationships), the natural environment (preservation efforts) and governance (government performance).

I can imagine some readers reacting with incredulity but I can believe those ratings, which are relative to other countries. If the situation seems bad, for example, seeing all the garbage around us, we have to remember there have been gains made in other areas of environmental conservation, often invisible.

It is important to keep accumulating social capital. The Prosperity Index researchers noted how Brazil’s overall ranking has dropped drastically over the years as it loses social capital. That could very well happen in the Philippines as we become divided from each other by a lack of trust.

We should also note areas where we did poorest: for the safety and security pillar we ranked low in national security, security of living conditions, while for health there is a high prevalence of illness and risk factors. For the business environment, we rated poorly when it comes to access to credit.

This Prosperity Index should get us thinking at an individual level, of both material wealth as well as a sense of social well-being. It’s not surprising two of the variables used under the pillar for health are “joy” and “sadness.”

Are you feeling prosperous today? Think Filipino; think “masagana.”

(You can download the report, as well as papers on their methodology and data, on prosperity.com)

mtan@inquirer.com.ph