LONDON – “It’s the economy, stupid” has been a political mantra for more than two decades. Nowadays, the phrase is repeated ad nauseam in development discussions. But making countries flourish is not so simple.
There is a wealth of literature describing the various factors that determine prosperity. In their widely discussed 2012 book Why Nations Fail, the economist Daron Acemoglu and the political scientist James A. Robinson emphasize the importance of inclusive political and economic institutions. According to the economist Angus Deaton’s new book The Great Escape, health is a key.
The just-released Legatum Prosperity Index points to another fundamental condition for success: good governance and the rule of law. As Program Director Nathan Gamester puts it, “It pays to be a democracy.” Indeed, as it stands, 27 of the world’s top 30 most prosperous countries are democracies. This is not true of the bottom 30.
Consider the development disparities in Africa. Countries like Botswana that have accountable governments, respect for the rule of law, established property rights, and independent judiciaries fare far better than their counterparts. But most countries on the continent fall into the “counterpart” category, with 24 of the bottom 30 countries in the Prosperity Index located in sub-Saharan Africa.