Norway is globe's best country for turning prosperity into citizen wellbeing

09 August 2018

Norway has been named the most prosperous country in the world in 2018 by The Boston Consulting Group. According to a study by the management consulting firm – the Sustainable Economic Development Assessment – Norway is the best at turning economic prosperity into citizen wellbeing.

Placing first on the ranking, Norway converts wealth into wellbeing making it the best nation at equally sharing its prosperity throughout society. Norway scored 85.3 on the Sustainable Economic Development Assessment (SEDA), a scale which measures wellbeing in ten dimensions split across three categories: economics, investments and sustainability. 

Coming in second was Switzerland, which was followed by Iceland and Luxembourg, with all having SEDA scores in the range of 83-84. The rest of Scandinavia, the Netherlands and Austria made up the all-European top 10, with the exception of Singapore which appeared seventh on the list. The top 20 represents a more diverse group with Australia and New Zealand appearing at number 13 and 14 respectively and Canada, the US, the UK and Japan taking the remaining non-European spots. Overall, Europe dominated in the prosperity rankings taking 29 of the top 40 spots globally. Norway is globe's best country for turning prosperity into citizen wellbeing

For the economic category, each country is given a score based on three factors. Firstly GDP per-capita – the usual basis to determine a country’s prosperity – is included, followed by economic stability (rate of inflation versus GDP volatility) and employment statistics (rate of unemployment / underemployment).

Norway’s score of 78.7 in the economics category fared worse off than Luxembourg and Singapore which both reached 100 in this category. In terms of wealth due to income, the entirety of Scandinavia received poor scores, with Finland on 56 and Sweden 65. Overall this category held back the leaders from reaching a higher score due to a lack of pay increases throughout the region. 

That being said, Norway outperformed the rest in almost every other criterion, specifically standing out in terms of the investment category. Investments is also split across three categories in the SEDA ranking; health (85.4), education (84) and infrastructure (79.2). A high level of healthcare can be attributed to both access to healthcare as well as healthcare outcomes. Education is measured across the same duel success factors whilst the infrastructure dimension focuses on basics including power and water to information and communications technology. SEDA scores across the wealth-to-wellbeing coefficient

This concept is the basis of the investments category and is also the heart of the SEDA ranking; turning wealth into wellbeing in turn contributes to economic growth. The report states that a country’s wealth has a pervasive impact on many of the factors that contribute to wellbeing. We focus therefore on the performance of countries in converting the wealth they do have into wellbeing.”

Where Norway shines most

The sustainability category combines the most criterion and is perhaps what sets the consulting firm’s SEDA report apart from other wealth and prosperity rankings. Spread across four separate dimensions including equality, civil society, governance and environment, when combined these dimensions cover some of the basic civil liberties which are constitutionally enshrined in the majority of prosperous nations. This is where Norway shines.

Norway has one of the highest level of equality across the entire globe with a score of 98.2, over 10 points higher than that of Switzerland. In terms of governance, Norway was only behind New Zealand in this regard, with a score similar to that of Switzerland, Finland and Sweden. The only score which saw Norway lose ground in the sustainability category was environment, where the global prosperity and ‘wealth sharing’ champ was eclipsed by the likes of Venezuela and the Democratic Republic of the Congo. 

“Norway has consistently been the country that has towered over all the others in the SEDA ranking,” said author of the report and BCG partner Joao Hrotko. “Its strong performance in taking its wealth (largely from its oil industry) and converting it into well-being is remarkable, and especially meaningful.”

The Boston Consulting Group’s SEDA criterion across ten dimensions

When measured against the gross national income, a country’s SEDA score can prove that a lesser economy can provide a better wellbeing for its citizens through infrastructure and sustainable economic investments. This also, in turn, affects a country’s ability to respond to economic crisis and promotes a virtuous cycle of economic growth. 

This is relevant as Norway was heavily affected by the drop in oil prices in 2016 and experienced a downturn in economic growth. The authors of The Boston Consulting Group report state; “Our findings mean that countries that focus on enhancing wellbeing not only raise the standard of living of their citizens but also set their country up for stronger and more resilient economic growth.” 

“Countries can – and should – aim to achieve the twin objectives of sustainable economic growth and improved well-being. SEDA can be a valuable tool as governments undertake this journey, shedding light on the impact of past policy decisions and informing strategies for the future.” 

Turning economic tide requires reassessment of strategic priorities

16 April 2019

Risks of a downturn in Europe continue on the horizon as various risks to (global) growth come together. A new survey of operations managers in Europe shows that around half expect a downturn somewhere in 2019, although few expect a recession. Leaders in financial services are the most pessimistic, while automotive respondents are the most likely to expect a downturn.

The financial crisis, born from a chain of activities on the back of risky lending by banks combined with poor risk governance as well as an inflated real estate market in the US, nearly collapsed the global economy. The decade that followed saw recovery, with recent years seeing sustained economic growth in Europe, booming equities and positive sentiment among companies and investors.

However, stability may be giving way to uncertainty in Europe. Global headwinds from a trade spat between the US and China, fallout from Brexit, as well as the rise of populism – particularly in Italy, Austria and the Netherlands – means that the tide is turning. Changes to monitory policy are also on the cards, with interest rates expected to rise in Europe and in the US. Meanwhile, the Chinese economy is projected to slow, while growth of other fast growing emerging market economies is stagnating.

Economic expectations - Overview

A new report by Roland Berger, titled ‘Operations Efficiency Radar’, highlights the changing sentiment among European business leaders. According to the study, the number of respondents expecting a downturn this year stands at 48%, up from 17% last year. Few, 2%, however expect a recession, comparable to the view last year.

The sentiment comes on the back of worsening key economic indicators, the researchers note. The number of restructuring cases has increased, global stocks fell 10% over 2018, and there are an increasing number of profit warnings across industries. Market volatility is also up, while business confidence and expectations have trended down over 2018. Profit warnings by companies have gone up, in particular in Europe’s largest economy Germany, and further interest rate hikes are looming around the corner.

Different industries have considerably different expectations. The most pessimistic industry is financial services – 11% of its professionals expect a recession this year and 33% a downturn. The automotive industry meanwhile has the highest number of leaders expecting a downturn, at 92%, followed by industrial products, at 56%. The most optimistic industry is chemicals/pharma, with 36% expecting a boom, followed by consumer goods and retail at 33%.

Economic expectations by industry

The changing market conditions are prompting leaders to change some of their strategic planning and priorities going forward. The automotive industry operations leaders are set to focus on production (79%), working capital management (79%), and product portfolios (77%). Aerospace and defence firms are set to focus largely on production (73%) and controlling & finance (66%), followed by procurement (64%) and product portfolios (61%). Industrial products companies are set to focus their operation priorities on product portfolio (75%), production (69%), and procurement (63%).

For four other industries studied – chemicals & pharma, consumer goods & retail, industrial services and financial services – product portfolio, which includes rationalising, optimising and innovating products, is the top strategic priority.

Commenting on the findings, the authors state, “The first consequences of the fragile environment are already visible in a number of indicators. Company leaders should use the results to challenge priorities throughout 2019, review their early warning systems, fine-tune and/or re-assess budgets and investments and consider crisis preparation scenario’s.”

Related: 13 business and technology trends for 2019.