A country’s ability to thrive economically depends neither on its size nor on a privileged access to a pool of natural resources such as oil, precious minerals. Countries with no natural resources such as Singapore have demonstrated that economic success is possible There are many key success factors that can help a nation on its path to sustained economic growth.
Communities with higher levels of social capital tend to have lower poverty rates, fewer incidents of violent crime and stronger democratic institutions. Nations with a healthy national identity are those whose people share the same constructions of the group identity and its boundaries. The absence of a clearly articulated national identity may lead to internal strife because it allows individuals to selectively use culture for their own self interests.
The Level Of Patronage In Wealth Creation
Nothing is more destabilizing than favouritism as it feeds discontent amongst those not benefiting from those “cozy relationships”. It creates the illusion that wealth can only arise from “power” rather than from hard work and creativity. Recent events in many countries have shown how discontent amongst the population can create havoc E.g “gilets jaunes” in France, Lebanon’s social unrest. Wealth resulting from patronage is hugely risky too. Governments come and go leading to the possible fast “evaporation” of such wealth.
Innovation and Productive Investments
Also, the beneficiaries of such established order become the major hurdles to economic development. When success depends on the level of conformity and obedience, there is no ambition for excellence. There is no urge for imaginative speculation and no forward looking approach in handling present challenges. Foreign investors tend to flee such politically charged environment. Opportunities dry up and the pool of talented skills gradually move overseas in search of better career prospects.
Efficient Allocation of Resources
Public expenditures on projects that have little value beyond pleasing constituents is a waste of public funds. Wrong allocation of public money can have dire consequences especially when it is a developing country. The state usually does not have the means to provide unemployment insurance and welfare programs that can pump more money into the economy when the economy is weak.
Level Of Public Debt
Another Key Performance Indicator (KPI’s) would be the size of the trade deficit of a country. A trade deficit implies that a country as a whole is spending more than it is earning. When trade deficits are growing gradually, it actually means that imports are being funded by overseas borrowing that keeps growing. The ability to repay debt depends, most of the time, on the state of global economy. For the past few decades, the level of uncertainty and volatility has increased so that a number of countries such as Barbados, Pakistan, Iceland have gone into bankruptcy. The presumption seems to be that because something is legal, it is morally right. This approach is both morally wrong and economically and politically unviable.
The Health Status Of The Local Manufacturing Sector
According to a report from the World Bank Commission on Growth and Development (2008), thirteen countries have been able to sustain growth of 7% or more for twenty five years at a stretch. Eleven of them were manufacturers. As at today, this rule of thumb is still true. The most well known example is South Korea whose national brands such as LG, Samsung are now global household names.
In today’s world economy, the economic performance of a nation is dictated, to a certain extent, to how well it has the required skills to capitalise on the technological revolution that is transforming a number of industries. The changes in technology are expected to have a bigger economic and social impact than globalization.
The Strength Of Public Governance
Unfortunately, politics tend to override economics very often, forcing actions that might not be in the best economic interests of the country as a whole. There is currently a huge democratic deficit in most countries – issues that are of importance to ordinary citizens don’t get the attention they deserve. A high level of transparency in the allocation of public money has long been recognized as one of the key conditions for a healthy dialogue between the citizens and their political leaders.
Participation Of Women In The Workforce
As a rule of thumb, countries with a large population of working women in highly skilled jobs tend to translate into a higher level of economic development. Many studies have demonstrated that women tend to spend more of their income on child education, family health and well being. With an aging population, making the most of its human capital is a must for most nations. Most countries are now faced with the challenge of funding the increasing expenditures of health and state pension with less and less income received from taxes charged on personal income.
The above list of KPI’s is not usually included in the GDP of a nation. They are mainly qualitative in nature. Intangible KPI’s are as important as traditional economic indicators such as GDP growth, the level of unemployment, etc. They provide a more complete picture of a country’s economic resilience.