For the past 6 years the Legatum Institute based in London has ranked the world’s nation in terms of 8 criteria :
Entrepreueurship & Opportunity
Safety & Security
Using these criteria the institute then provides an overall Prosperity Index.
Top of the rankings for the 2012 rankings were again the Scandinavian nations of Norway, Denmark and Sweden. Australia and New Zealand then followed in 4th & 5th.
We often hear the phrase the “Lucky country” and this prosperity index provides some interesting insights into why this might be the case not only for us who live here but for those looking in from the outside. The areas of particular strength were deemed to be Education, Personal Freedom & Social Capital.
An interesting aspect of this year’s report is the highlighting of the rise of the Tiger cub nations – Indonesia, Malaysia, Thailand and Vietnam - over the past 4 years. This is particularly interesting given the background of Australia’s recent white paper on engagement with Asia but also our close geographical links to this part of the world.
For me the key take aways are to reflect on and be proud of the prosperity we have in Australia but to continue to work hard and smart to keep this prosperity in place including strong engagement with nations in our own back yard.
As an investor, it suggests that placing confidence in our own Australian companies is warranted with the index also speaking to the grower prominence of not only China and India but also the ASEAN region of nations. A well diversified portfolio should be including exposure to this area of the world. We suggest clients do so through investing in the broad Emerging Markets asset class.