Austria’s economic performance benefits the well-being of the population
The so-called “soft facts” such as quality of life are far behind in this list of criteria. Nevertheless, looking at the overall package, the prosperity and the quality of life of a country are important criteria. They not only impact purchasing power and thus market opportunities, but also create a stable environment for companies.
As a leading strategy consulting firm, we see every day which problems companies have. In addition to keeping pace with current challenges such as digitalization, the overall situation of a country is always of importance to the economic success of a company. For this reason, my partner and colleague Douglas Beal developed an index which incorporates “well-being” as a criterion in addition to conventional indicators of prosperity such as GDP, per capita income and the like. This so-called “Sustainable Economic Development Assessment” (SEDA) of the Boston Consulting Group (BCG) makes a ranking available which can be play a key role in the decision-making process.
The SEDA Index is related to the gross domestic product (GDP) of countries, but not only to this. What is of particular importance is how a country can distribute wealth. The Boston Consulting Group has selected 44 indicators in order to compare how well people are doing in 162 countries, analyzing ten factors and three areas. The economic factors include income, economic stability and employment. The area of “Investments” encompasses health, education and infrastructure. Sustainability includes the environment, public administration (governance), civil society and the distribution of wealth (income equality).
Austria ranks among the top five globally
Austria particularly understands how to convert the strong economic performance into well-being for the benefit of the population. In plain language, this means that Austria has not only achieved economic growth but has also succeeded in distributing this growth on a broad basis. In a global comparison, there are only very few countries in which the level of prosperity is so high, and wealth is distributed so equally, as in Austria. In our SEDA Ranking 2017, the Alpine Republic ranks fourth among 162 countries in the world! Thus Austria ranks among the top five globally, and surpasses the EU average in almost all areas. It is the country’s best performance since the index was first created in 2012. In the light of very fundamental indicators, the position of individual countries usually changes very slowly. The SEDA indicators distinguish between the extent to which previous wealth has contributed to the overall well-being of the population and the extent to which current growth can be used to ensure that people do well. Austria is above-average in both categories and improved its standing from an already high level.
Only Norway, Switzerland and the Netherlands are rated ahead of Austria. In particular, Austrian investments in education and its healthcare system have paid off. Austria is ranked especially high with respect to education and the labor market, and to get into greater detail, shows a high density of doctors, a relatively good pupil/teacher ratio and a high level of employment. Between the years 2006 and 2016, Austria, France, Great Britain and Sweden generated similarly high average rates of economic growth of up to one percent annually. However, of all the countries in this group, only Austria managed to achieve above-average improvements in its quality of life on the basis of this growth.
Well-being is distributed according to continents
Western European countries comprise almost all the members of the top ten in the current SEDA Index. They include Finland, Iceland and Belgium in addition to the top-ranking nations. Other industrial nations are, in part, far behind. Germany exchanged places with Austria in comparison to 2016 and is now ranked fifth. Denmark is seventh and Sweden is eleventh. In the current assessment we attached particular importance to one special correlation. When the income gap is quite wide, for example in Egypt or Mexico, it is much harder to convert the existing level of prosperity into a corresponding quality of life. The USA, which is “richer” in terms of purchasing power, is only ranked 17th. Other important factors include the involvement of civil society and good governance.
Another result of our study is that well-being is distributed according to continents. Africa is far behind. One has to consider many factors, such as investments in education and health and the creation of jobs but also the fact that the continent is fragmented. People who want to travel to Africa require many visas. It is very complicated to trade with goods in Africa. This not only applies to the Africans themselves but also to Europeans. All this is accompanied by a high level of inequality, with wealth concentrated in the hands of a very few.
Prosperity as a business location factor
50 years of hard work is the underlying reason for Austria’s good ranking. Prosperity did not simply fall into Austria’s lap, but had to be earned. The excellently educated and highly motivated employees contributed to this, just as the overall stable situation and many forces at work which were always interested in achieving a balance. Even if one knows Austria to be a country of lakes, mountains, Mozart chocolates and Lipizzaner horses, it is actually one of the most highly industrialized countries in the world, and the fourth richest country in the EU. Ideally, prosperity has been converted into well-being for the benefit of the population. This is one additional argument for a future-oriented company to set up a subsidiary in Austria. Only stable conditions can lead to stable profits in the long term.
If you are interested in the “Sustainable Economic Development Assessment“ (SEDA), you can find more information here.