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The World

Mar 4, 2011

It's official: Australia is the No.1 place to be

While nobody was noticing, late last year Australia pipped Norway to achieve the highest standard of living in the world.

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For every Australian tired of bad news — disasters, political disputes and public people behaving badly — here is some good news. While nobody was noticing, late last year Australia pipped Norway to achieve the highest standard of living in the world.

Standards of living used to be equated with national wealth divided by the number of people — per capita GDP — and this is still part of the measurement. However, standards of living involve a complex range of factors, including income distribution, longevity, infant and maternal mortality rates, education, crime rates, natural disasters and so on. These are known as Human Development Indicators (HDI).

If there is any negative news in this, it is that at least some of the data the Australian HDI is based on is drawn from 2008, with only some of it reflecting the situation in 2010. Ireland is still ranked fourth in the world, which indicates that the recent dramatic economic events have not been factored into the latest standings.

It also means that Australia may have been at the top of the pile for a couple of years without even knowing it. It also means that things might have slid over that time, although the only real negative since 2008 has been in the shape of natural disasters — some really nasty fires and a couple of very bad floods.

But, in that we have some control over our own affairs, Australia is doing exceptionally well. Australia started to approach Norway around 1995 and the two countries tracked very closely until last year when Australia snuck ahead.

Norway has rated well over the past 30 years primarily due to the smart investment of its oil wealth into a national fund, with the interest from the investment topping up government spending. Norway’s emphasis on social services along with its high per capita GDP have kept it at the top of the rankings over those four decades.

Needless to say, factors such as days of full sunlight as opposed to spending a lot of time shivering in the dark are not included in the statistics, which might well help create a bigger gap between Australia and Norway if they were.

Two of the economic criteria for determining HDIs is how much a currency can buy in the local market (purchasing power parity) — what a dollar will buy in Australia is, for example, much less than it will but in a developing country — while the distribution of income (Gini Coefficient) also says more about how wealth is distributed than just raw average income figures.

Norway scores much more highly in per capita GDP and PPP at over $58,000 per head compared with Australia’s just over $40,000, and slightly better in terms of equality of income distribution. But Australia scores slightly better in other areas, such as equality of access to education. Australia also does slightly better on gender inequality, in terms of workforce participation, empowerment and reproductive health.

While Australia and Norway battle it out for top HDI honors, there are some real horror stories further down the scale. Not surprisingly, countries that are poorest are also often least well administered and often have the worst income distribution.

Sub-Saharan African states fare worst of all, as a group, in part because of their poverty but in part also because that such wealth that they do have, in some cases quite considerable, is very poorly managed or squandered on corruption, expensive militaries and political “trophy” purchases. How this plays out in infant mortality, average life expectancy and so is all but unbelievably bad.

And if anyone has ever wondered about the link between poverty and war, the list of embattled countries also tends to read like the who’s who of poorest countries with the lowest HDIs. The lowest-ranked countries are grouped closely together, with Afghanistan fifth from the bottom.

It could be worse, however. Along with Robert Mugabe’s mental health, Zimbabwe has been declining since 1990. It currently has the lowest HDI in the world.

n.b. Data drawn from the UNDP International Human Development Indicators 1970-2010 Trend Analysis.

Damien Kingsbury —

Damien Kingsbury

Crikey international affairs commentator

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