The Boston Consulting Group (BCG) has released its 2015 Sustainable Economic Development Assessment which it has titled “Why well-being should drive growth strategies”. The following is taken from their media release with the document.

"Government leaders increasingly speak of boosting the well-being of citizens—rather than bolstering GDP growth—as their primary mission. But the conventional yardsticks of per capita GDP and growth are too narrow to evaluate the full measure of well-being. What’s needed is a broad diagnostic tool designed specifically to help governments set priorities and formulate development strategies.

We developed BCG’s Sustainable Economic Development Assessment (SEDA), a comprehensive diagnostic tool based on objective data, for just that purpose. SEDA’s design reflects the need of governments to pursue a balanced approach to raising the overall well-being of their citizens—one that is focused on economics, critical investments, and the social and environmental factors that ensure sustainability of progress over time.

Our latest assessment includes 148 countries plus Hong Kong, which is a special administrative region of China. Our findings include both compelling stories and warning signs. Among the highlights:

  • Some countries—Norway, Rwanda, and Poland in particular—are standouts in terms of either creating high levels of, or making significant progress in, well-being for their citizens.
  • Many countries that score low in terms of either wealth or well-being are not making much progress. In addition, we find that more than half of the world's population live in countries that are weak—and falling even further behind—in sustainability.

Defining Well-Being

SEDA defines well-being through three fundamental elements that comprise ten dimensions. (See Exhibit 1.)

  • Economics, which includes income, economic stability, and employment
  • Investments, which includes education, health, and infrastructure
  • Sustainability, which covers two aspects: the environment dimension and social inclusion, which comprises the income equality, civil society, and governance dimensions

SEDA

For each country, we calculated four measures that provide different insights into those nations’ relative levels of well-being:

  • The current level offers a snapshot of well-being today on a scale of 0 (the lowest level) to 100 (the highest).
  • Recent progress examines how well-being has evolved during the period of 2006 to 2013. This metric is also measured in relative terms, on a scale of 0 to 100.
  • Wealth to well-being compares a country’s current level of well-being with the level that would be expected given the nation’s per capita income level. The expected level is represented by a coefficient of 1.0, which is based on global averages.
  • Growth to well-being compares how well a country has converted its economic growth into improvements of well-being with the level that would be expected, which is also represented by a coefficient of 1.0 based on global averages.

Good News—and Warning Signs

One of the most striking insights revealed by our analysis is that countries with midrange current-level scores, such as China and Indonesia, are making the most progress—rather than countries starting from the lowest positions. This is counterintuitive, as one might expect the countries with low current levels to have the greatest room for improvement.

What’s more, layering income levels shows that while low- and middle-income countries as a group made more progress than high-income countries, middle-income countries are making the fastest progress overall. This suggests that the often-discussed “middle-income trap”—the notion that countries plateau once they hit some middle range in terms of income—does not apply when looking at a country’s trajectory through the lens of well-being.

But these findings also reinforce concerns over the slow gains in recent progress of many low-income countries. This is particularly true in the sustainability element, where countries with high current-level scores are also making the most progress, pulling away from the pack, while weaker performers are falling further behind. This widening gap—which is not apparent when more common measures, such as GDP, are used—raises questions as to what is required to produce sustainability improvements and what can be done to help those lagging performers catch up.

Some Countries Lead—While Others Make Big Strides

All but one of the ten countries with the highest current-level SEDA scores are in Western Europe; the exception is Singapore.

Top performer Norway continues to pull further ahead thanks, in part, to further reduction in inequality. Norway posted the highest scores in employment, income equality, and civil society as well as top-ten scores in both income and governance. The nation also exemplifies divergence in sustainability, boasting among the highest current-level and recent-progress scores in that element. This reflects Norway’s highly developed and still-improving social institutions. Case in point: the country has recently increased the length of paternity leave for new fathers so that new mothers can return to the workforce more rapidly. And Norway’s already good Gini coefficient, a measure that reflects income inequality, further improved during our study period.

The list of countries that made the most overall recent progress in well-being is more varied. Standouts include nations in Africa, Asia, and Europe; Indonesia is one of the few countries that show very strong recent progress in two of the three SEDA elements.

Four of the top ten countries in terms of recent progress are in Africa, with Rwanda attaining the highest overall score. The nation posted recent-progress scores in line with the median—or above the median—in every dimension, and it was among the top ten countries in governance, health, and economic stability. Indeed, over the past several years, Rwanda has taken positive steps—which have been widely regarded as successful—toward reforming macroeconomic policies and commercial laws.