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Legatum Prosperity Index™

Legatum Prosperity Index™. Seminar at Nottingham University School of Contemporary Chinese Studies. Insight into China’s Prosperity in the past five years. Edo Omic Research Analyst, Legatum Prosperity Index Solène Dengler Policy Analyst, Legatum Prosperity Index. 4 February 2014.

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Legatum Prosperity Index™

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  1. Legatum Prosperity Index™ Seminar at Nottingham University School of Contemporary Chinese Studies Insight into China’s Prosperity in the past five years Edo Omic Research Analyst, Legatum Prosperity Index Solène Dengler Policy Analyst, Legatum Prosperity Index 4 February 2014 www.prosperity.com

  2. Outline • The Legatum Prosperity Index™ • China in the Prosperity Index • Future reform for China’s prosperity • Educational reforms • Social capital • Governance changes • Conclusion

  3. Why the Prosperity Index? • GDP does not adequately capture human well-being, measures the flow rather than the stock of capital and leads to a destructive focus on economic growth • Beyond-GDP literature: quasi-consensus that national success is about more than just wealth • The “GDP Paradox”: Despite a growing consensus on the need for “Beyond GDP measures”, GDP is still widely used as a measure of welfare

  4. 2013 Legatum Prosperity Index™ • 142 countries • 96% of the world’s population • 99% of global GDP • 8 sub-indices, equally weighted

  5. Methodology • The only global measurement of prosperity based on both income and wellbeing • 200 variables identified in the academic literature • The final 89 variables were selected according to their global coverage and by using regression analysis to determine a significant relationship with wealth and wellbeing • Weighting of variables according to coefficients from regression analysis but equal weighting of sub-indices • Use of objective and subjective data retrieved from global databases (Gallup World Poll, World Bank, World Health Organisation and Freedom House)

  6. Prosperity Index Rankings

  7. What can the Prosperity Index tell us about the world today? • The Prosperity Index is about more than country rankings. It is an exploration into the sources of prosperity and how they relate to each other.

  8. CHINA in the Prosperity Index • 2013 Prosperity Index Ranks • 2009 Prosperity Index Ranks

  9. CHINA (and Asia) rising in Economy

  10. Future Reform for China’s Prosperity • Educational Reforms • Where China needs to improve relative to its regional neighbours and global counterparts • Social Capital • What China’s high social capital means for the government's “social organisations” and the lack of a coherent welfare state • Governance Changes • The steps the party is making towards governance changes and the long road towards good governance

  11. Educational Reform in China • The differences are mainly between URBAN and RURAL students • (1) Prevalence of affluent (URBAN) students • Disproportionately making up student enrolment in higher education, especially top universities. • Richer students have financial access to tutors and extra-curricular activities. • (2) Urban schooling • Primary and secondary education better financed • Rural students need to perform as well as urban students – but the latter have better resources • (3) Admissions are the result of connections • Admissions are in part reflection of better connected urban students (with families with connection to business, part, etc.)

  12. Educational Reform in China

  13. Educational Reform in China

  14. Educational Reform in China

  15. Educational Reform in China

  16. China’s Social Capital • Third plenum President Xi Jinping announced the potential formation of “social organisations” • In principle NGOs to help alleviate the social needs within society • These social organisations are envisaged to help the urban/rural poor, the elderly, and the sick. • Social Capital sub-index performance encouraging • Ranks 25th in the world • High Trust levels • Ability to rely on family and friends during difficult times • But, the underlying indicators necessary to establish these “social organisation” perform badly.

  17. China’s Social Capital

  18. China’s Social Capital

  19. China’s Social Capital

  20. China’s Social Capital

  21. Changes in Governance • President Xi Jinping has indicated gradual reforms towards improving governance in China. • Possible judicial reforms of separating the judiciary from administrative functions. • Widespread anti-corruption campaign. • In the Prosperity Index, China performs well due to subjective measures • Objective measures are performing badly, regarding: • Political rights • Bureaucratic efficiency • Rule of law • Checks and balances within political system

  22. Changes in Governance • Improvements in part due to Government Effectiveness and Decreases in Corruption

  23. Changes in Governance • Long road to accountable political institutions • No political Rights • Limited constraints on executive/separation of powers • Rule of Law indicators have been chronically low

  24. All our data and the rankings are available for free use online: www.prosperity.com

  25. Thank you

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