Economic growth does not always result in social progress, according to a major new global index published today by US-based nonprofit the Social Progress Imperative, and released at the 2014 Skoll World Forum on Social Entrepreneurship. The Social Progress Index 2014 ranks 132 countries based on their social and environmental performance. Higher GDP per capita does bring benefits, particularly on 'Basic Human Needs'. But rising incomes do not guarantee improvement on 'Ecosystem Sustainability', 'Health and Wellness' and 'Opportunity'.
The Social Progress Index, created by a team led by Professor Michael E. Porter of Harvard Business School, is designed as a complement to GDP and other economic indicators to provide a more holistic understanding of countries' overall performance.
Professor Michael E. Porter said: "Until now, the assumption has been that there is a direct relationship between economic growth and wellbeing. However, the Social Progress Index finds that all economic growth is not equal. While higher GDP per capita is correlated with social progress, the connection is far from automatic. For similar levels of GDP, we find that some countries achieve much higher levels of social progress than others."
Steve Almond, Global Chairman of Deloitte Touche Tohmatsu Limited (Deloitte Global), said: "In order to achieve sustainable growth and strengthen society we need a better way to assess social progress."
Michael Green, Executive Director of the Social Progress Imperative, said: "Economic growth does not automatically lead to social progress. The Social Progress Index shows that if we are to tackle problems such as poverty and inequality economic growth alone is not enough."
Sally Osberg, President and CEO of the Skoll Foundation, said: "Making social progress a true imperative means putting the progress of humanity and our wellbeing on an equal footing with GDP."
- The Social Progress Index does show a broad positive correlation between economic performance, (measured in GDP per capita) and social progress. Countries with higher incomes tend to enjoy greater social progress: New Zealand ($25,858 *GDP per capita) ranks highest in the Index while Chad ($1,870* GDP per capita) ranks lowest.
- However, the Index demonstrates that economic performance alone does not fully explain social progress. The country with the world's highest per capita GDP in our rankings -Norway ($47,546*)-finishes in 5th ranking behind New Zealand, whose GDP per capita is almost half that of Norway's. Similarly, at the bottom of the Index, Chad has a much higher per capita GDP ($1870*) than Liberia ($560*), that finishes in 120th ranking. This pattern is repeated at all levels of economic development: for example despite a lower level of per capita GDP Jamaica performs better than China.
The relationship between economic development and social progress changes with rising income.
- At lower income levels, small differences in GDP are associated with large differences in social progress. For example, on 'Water and Sanitation' and 'Shelter' there is a huge leap in improved outcomes between low- and lower-middle income countries.
- However, as countries reach high levels of income, the 'easy' gains in social progress arising from economic development seem to become become exhausted and further economic growth brings new social and environmental challenges. For example, on 'Ecosystem Sustainability'-which looks at indicators like greenhouse gas emissions-high- income countries fare little better than low-income countries. Indeed, as low-income countries' economies grow they can expect their 'Ecosystem Sustainability' to get worse before it improves.
- For lower income countries economic growth will not necessarily result in significantly improved social progress. For example, on 'Personal Safety' it's only when countries reach high-income status that homicide rates, violent crime and traffic deaths seem to significantly reduce, but even then there is a wide spread of variation between these high-income nations. Until then the improvements in 'Personal Safety', between low -and middle- income countries, remains stubbornly limited.
- High-income levels of GDP lead to 'Basic Human Needs' being met, but don't guarantee increased 'Opportunity' for citizens. When countries reach high-income status, on measures of 'Opportunity'-which takes into consideration things including 'Personal Rights' and 'Tolerance and Inclusion'-they do on average see significant improvements in this measure. However, there's a wide diversity in scores between these high-income countries, much more so than on 'Basic Human Needs'-which assesses factors including 'Water and Sanitation' and 'Basic Medical Care'-and which all high-income countries score favourably on.
- The majority of countries are doing a good job in meeting their citizens' basic medical needs and the same is true of measures such as school enrollment and adult literacy. This may suggest that the Millenium Development Goals have had a positive impact driving social progress in these areas. To accelerate progress on issues such as 'Personal Safety', 'Access to Higher Education' and 'Ecosystem Sustainability', where the world is doing less well, may require a similar coordinated global effort.
Key global highlights include:
- New Zealand is this year's top performing country.
- The Netherlands is the best performing country in European Union.
- Canada is the best performing G8 country.
- Slovenia and Estonia are Europe's big success story, scoring better than France, Spain and Italy. Of the big EU countries Italy is a big under-performer, also coming in behind former Soviet bloc countries such as the Czech Republic, Slovakia and Poland.
- Costa Rica and Uruguay are the star performers in Latin America.
- Brazil is the top of the BRICS, followed by: South Africa, Russia, China, and India.
- Apart from Brazil, the BRICs are all significant under-performers on social progress, suggesting that, for China and India in particular, rapid economic growth is not yet being converted into better lives for their citizens.
- The United States finishes 16th behind Canada (7th) and the UK (13th). The Index identifies a wide range of areas in which the United States is "consistently under-performing" compared to countries with a comparable GDP per capita, according to Michael Green, Executive Director of the Social Progress Imperative.
- Russia ranked 80th in the Index, below the Ukraine (62nd) and Georgia (66th).
- India ranked 102nd on the Index, below Bangladesh (99th) and Sri Lanka (85th).
The top five:
1. New Zealand - scores particularly well on political rights, access to modern communications and school enrollment. This achievement is particularly impressive given that New Zealand's GDP per capita is $25,875* (just 25th globally).
2. Switzerland - scores well on ecosystem sustainability, personal safety, life expectancy, and religious freedoms.
3. Iceland - scores consistently well across all categories, particularly on tolerance and inclusion and on access to information and communications. Like New Zealand this result is impressive - over-performing against its GDP per capita of $33,880* (13th globally).
4. Netherlands - scores well on water and sanitation, access to information and communications, ecosystem sustainability, and political rights.
5. Norway - scores well on personal safety, internet users, press freedoms, and basic medical care.
Sally Osberg, President and CEO of the Skoll Foundation, said: "The Social Progress Index prioritizes and measures what matters, capturing data that ranges from basic needs such as health to the building blocks and guarantees of opportunity such as education and rights. The Index is a game-changing new tool, designed to empower governments, businesses, social entrepreneurs, and others; to advance their collective accountability; and to illuminate opportunities for investing in and scaling solutions.
"As the first global framework to disaggregate global social progress from economic progress, the Social Progress Index will propel nations on a path to a more peaceful, prosperous, and sustainable world."
Almond added: "Deloitte is collaborating with the Social Progress Imperative and others because we believe business has a role to play in helping solve the world's critical issues and the Index is a tool that can ignite collective action from business, government and society."
Professor Michael E. Porter said: "The Social Progress Index is the most inclusive and ambitious effort ever attempted to define and measure social progress comprehensively. It is a new tool which allows us to have a more complete picture of a country's wellbeing as a society that can be compared and evaluated against economic performance. It is our hope that just as GDP per capita is the de facto measure of economic success, so too SPI will become a widely accepted measure of social and environmental success.
"The Social Progress Index is designed to capture the full breadth of issues that define social progress, benchmark country performance, and identify priority areas for improvement. The Index uses indicators that measure outcomes - such as life expectancy, literacy, and freedom of personal choice - rather than inputs such as size of government spending or laws passed. And, because the Social Progress Index measures comprehensive social outcomes directly, separately from economic indicators, it allows us - for the first time - to examine the relationship between economic and social progress."
The Social Progress Imperative created the Social Progress Index working in collaboration with scholars from the Harvard Business School and the Massachusetts Institute of Technology (MIT), as well as international organizations in social entrepreneurship, business and philanthropy led by the Skoll Foundation and Fundación Avina as well as Cisco, Compartamos Banco, Deloitte Global and its member firms (Deloitte).