In an effort to provide a better measure of global living standards than the widely-used but limited scope of gross domestic product (GDP), last year the World Economic Forum introduced an Inclusive Development Index that took into account a variety of additional factors.
Those factors included 15 areas spread across three categories: Growth and Development (GDP, Labor Productivity, Employment, and Life Expectancy), Inclusion (Median Household Income, Poverty Rate, Income Gini, and Wealth Gini), and Intergenerational Equity and Sustainability (Adjusted Life Savings, Public Debt, Dependency Ratio, and Carbon Intensity of GDP).
While GDP measures only the economy of a country in total, the IDI uses these additional factors to see what that means for the average citizen of each country – and the disparity can be alarming.
The results may not be entirely surprising: European (and especially Scandinavian) countries dominated the top of the list, while some countries frequently thought of as global economic leaders trended much lower.
And while the Czech Republic ranks 28th in overall GDP among advanced economies, the country came in 16th in IDI among the 100+ nations studied. It’s no fluke: this year, the Czech Republic ranks 15th, with a five-year trend of +2.88%.
When comparing GDP to IDI, the 2018 measures the countries whose overall growth has also translated to growth in individual living standards. The Czech Republic (along with Iceland, New Zealand, Nicaragua, Rwanda, South Korea, and Vietnam) is highlighted among the best, whereas overall GDP growth in economies like the USA, Japan, and Brazil hasn’t benefited the average citizen.
The Czech Republic ranked highest in the subcategories of Income Gini (a measure of income inequality), Public Debt, and Poverty Rate, which rated second-lowest overall (only Denmark had a lower poverty rate). Looking at five-year trends, only Ireland showed more growth in the Employment Index.
But there’s still work to do: among advanced economies, the Czech Republic scored low in overall GDP, Labor Productivity, Median Income, and Healthy Life Expectancy (only Slovakia, Estonia, and the United States had a lower life expectancy).
Overall, Norway topped the list for the second year running, while Iceland surged into the #2 position. Luxembourg, Switzerland, Denmark, and Sweden followed; Australia and New Zealand were the only non-European countries in the top 15.
Czech neighbor Slovakia ranked 20th, ahead of both the United Kingdom (21) and the United States (23). These are the rankings for the 30 advanced economies in the WEF’s Inclusive Development Index: