The decade since the financial crash has laid bare the injustices of many countries’ economic models. Inequality of income and opportunities can no longer be ignored. Yet while no country was untouched by the crash, it’s become clear that some are much more equitable than others. Here, Gemma Corrigan, Practice Lead for Inclusive Growth at the World Economic Forum, looks at which countries have the most inclusive economies – and what lessons they could hold for others.
Slow growth and rising inequality have reached a tipping point in many of the world’s advanced economies.
The World Economic Forum’s Inclusive Growth and Development Report 2017 lays out strategies for cutting the current vicious cycle of stagnation and polarisation of income and opportunities. It aims to answer the question – how can this be turned into a virtuous cycle of greater social inclusion and stronger, more sustainable growth?
Breaking the vicious cycle
In other words, how can we increase not just GDP but the extent to which this top-line performance of a country cascades down to benefit society as a whole? The answer, according to the report, is placing people and living standards at the centre of national and international economic policies.
Education, infrastructure, ethics, investment, entrepreneurship and social protection are just some of the factors playing into creating this new economic policy – and the mix will be different for each country.
The World Economic Forum’s Inclusive Development Index (IDI) ranks the world’s advanced and developing economies based on their performance against key performance indicators ranging from poverty, inequality to public debt and environmental factors.
Learning from the leaders
Norway tops the IDI, with high and rising living standards, effective social protection and low inequality. There is a high degree of social mobility, low unemployment and a large share of women participate in the labour force, helped by sound parental leave policies and affordable childcare.
Luxembourg and Switzerland come in second and third place in a top 10 dominated by Northern Europe. This is driven by robust growth and employment, high median living standards, strong environmental stewardship and low public debt.
In 4th place, Iceland had also shown the greatest improvement over the past 5 years, together with New Zealand and Israel.
Denmark, Sweden and the Netherlands follow, buoyed by high living standards and good social protection.
New Zealand and Australia, in 8th and 9th place respectively, are ranked particularly highly for aspects such as fostering an entrepreneurial culture.
Austria completes the top 10.
Room for improvement
Room for improvement for these top-performing countries frequently surrounds reducing wealth inequality, which has risen in 77% of economies globally, and intergenerational equity.
Among developing economies, Lithuania, Azerbaijan and Hungary lead the IDI, with Lesotho, Nepal and Georgia having improved the most since 2011.
Click here to see what makes Norway’s economic model work relatively so well, for so many.
(Picture credit: Flickr/Giuseppe Milo,Inclusive Growth and Development Report 2017)