Wednesday, November 21, 2012

Iraq Does Badly In Another Global Ranking, This Time On Economics

In November 2012, England’s Legatum Institute released its annual Prosperity Index. The survey covered 142 countries, and ranked them according to eight categories. Those were economics, entrepreneurship, governance, education, health, safety and security, personal freedom, and social capital. The Institute supports the growth of democracy and capitalism, and the index was meant to measure the state of those two systems across the globe. Iraq fell towards the bottom of the list at 131. That placed it second to last in the Middle East and North Africa. Iraq routinely finishes low in these types of lists, because it is coming out of decades of dictatorship, an invasion, and civil war.

The purpose of the Prosperity Index was to look at economic opportunity, access, confidence, and well being across the globe. This was based upon eight factors. The first was economics that included macroeconomic policies, economic satisfaction and expectations, foundations for growth, and the financial sector. Economic policies obviously affect income and well being, and also shape expectations of the future. Entrepreneurship looked at the entrepreneurial environment, innovation, and access to opportunity. A good business environment can improve the economy, and living standards. Governance included effective and accountable government, fair elections, political participation, and rule of law. Good governance can help with economic growth, as well as protect freedom. Education was made up of three factors including access to schools, quality of education, and human capital. Education can stimulate economic growth. Outcomes, infrastructure, and satisfaction made up the Health factor. Safety and security was made up of national security and personal safety. Stability is obviously necessary for investment and economic growth. Personal freedom looked at individual rights and social tolerance. Finally, social networks covered social cohesion and community networks.

2012 was the first year that Iraq was included in the Legatum Institute’s index, and it did not do well. It ranked 131 out of 142, just placing it outside of the bottom ten. It was also second to last in the Middle East and North Africa. The United Arab Emirates ranked best in the region at 29, followed by Kuwait at 38, Israel at 40, Saudi Arabia at 52. At the very bottom was Yemen at 134. Libya, Oman, and Qatar were not included. Iraq did badly on all eight of the Institute’s eight categories, which could be expected. On economy it was 92, on entrepreneurship 125, governance 137, education 112, health 107, safety 135, personal freedom 141, and social capital 105. The information for these scores mostly came from 2008-2011, although a few were from before that period. The earlier information is problematic, because that would place it during the civil war when Iraq was a failed state. 2008 to the present is much better, because security is much improved allowing for a sense of normality to return. Since Legatum was mostly concerned about economics, the newer the data the better, because Iraq is seeing large economic growth with massive investment in the oil industry, which is fueling state revenue that is at the heart of everything since Iraq still has a largely command economy. At the same time, the bureaucracy is notoriously bad, the state is the largest employer, the economy is dominated by oil and gas, and the government goes from crisis to crisis. Finally, the insurgency is still around carrying out daily terrorist acts. Given all that it’s no surprise that Iraq would do badly on the index.

Legatum Institute’s Prosperity Index – Middle East/North Africa
United Arab Emirates 29
Kuwait 38
Israel 40
Saudi Arabia 52
Morocco 73
Jordan 77
Tunisia 78
Algeria 100
Iran 102
Egypt 106
Syria 113
Iraq 131
Yemen 134
Libya N/A
Oman N/A
Qatar N/A

Iraq’s Scores On Index
Economy 92
Entrepreneurship and Opportunity 125
Governance 137
Education 112
Health 107
Safety and Security 135
Personal Freedom 141
Social Capital 105

Iraq is a struggling country coming out of two decades of wars, sanctions, and dictatorship. It’s for those reasons it consistently struggles in global rankings such as the Legatum Institute’s. At the same time, things are beginning to turn around, at least economically now that major fighting is over. That doesn’t mean the government isn’t dysfunctional, and there aren’t large structural problems with a society based upon the exploitation of natural resources. It does mean that some things are improving however. It will probably take several years for outside groups to catch up with these changes going on. Even then, Iraq will still probably rate the same as many other developing countries, and have a hard time moving up the list of other Middle Eastern and North African nations, because of its government and oil dependence.


Legatum Institute, “2012 Legatum Prosperity Index,” November 2012

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