Mon, Oct 01, 2012 - Page 9 News List

Finding the keys to national prosperity

Most nations could improve their economy by ‘policy arbitrage,’ such as taking Germany’s labor-market policies, Canada’s healthcare system, Switzerland’s energy efficiency and Brazil’s anti-poverty programs

By Jeffrey Sachs

In an age of intense technological competition, countries that combine public and private research and development (R&D) financing are outpacing the rest. The US continues to excel, with huge recent breakthroughs in Mars exploration and genomics, though it is now imperiling that excellence through budget cuts. Meanwhile, Sweden and South Korea are now excelling economically on the basis of R&D spending of about 3.5 percent of GDP, while Israel’s R&D outlays stand at a remarkable 4.7 percent of GDP.

In an age of rising inequality, at least some countries have narrowed their wealth and income gaps. Brazil is the recent pacesetter, markedly expanding public education and systematically attacking remaining pockets of poverty through targeted transfer programs. As a result, income inequality in Brazil is declining.

In an age of pervasive anxiety, Bhutan is asking deep questions about the meaning and nature of happiness itself. In search of a more balanced society that combines economic prosperity, social cohesion and environmental sustainability, Bhutan famously pursues Gross National Happiness rather than Gross National Product. Many other countries — including the UK — are now following Bhutan’s lead in surveying their citizenry about life satisfaction.

The countries highest on the ladder of life satisfaction are Denmark, Finland and Norway. Yet there is hope for those at lower latitudes as well. Tropical Costa Rica also ranks near the top of the happiness league. What we can say is that all of the happiest countries emphasize equality, solidarity, democratic accountability, environmental sustainability and strong public institutions.

So here is one model economy: German labor-market policies, Swedish pensions, French low-carbon energy, Canadian healthcare, Swiss energy efficiency, US scientific curiosity, Brazilian anti-poverty programs and Costa Rican tropical happiness.

Of course, back in the real world, most countries will not achieve such bliss anytime soon. However, by opening our eyes to policy successes abroad, we would surely speed the path to national improvement in countries around the world.

Jeffrey Sachs is a professor of economics and director of the Earth Institute at Columbia University. He is also special adviser to the UN secretary-general on the Millennium Development Goals.

Copyright: Project Syndicate

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