The report warned that Nordic dominance could be on the wane. Photo: Colourbox
In the 2015 Prosperity Index, released by the Legatum Institute on Monday, Denmark was ranked behind just Norway and Switzerland, moving up one spot from last year’s ranking.
The top of the index slanted Nordic, with Sweden (fifth), Finland (ninth) and joining Denmark and Norway in the top ten. Iceland was not far behind at 12th.
However, the report’s authors said that the Nordics’ hold on the top position in the index masked an underlying decline in economic performance — one of eight factors used to rank the world’s countries. Although Denmark was third overall, it was at number nine in the economy sub-index.
“The Prosperity Index shows that the Nordics are prosperous places, however, prosperity cannot be taken for granted and without robust job growth the Nordics will struggle to remain at the top of the pile,” the report's authors wrote.
Denmark’s best performance was in the category of entrepreneurship and opportunity, echoing the results of last week’s Doing Business report from the World Bank, which pointed to the ease of starting a company as one of the key reasons for Denmark’s position as Europe’s best country for business.
Denmark ranked lowest in the health index, where it was number 16.
In a special report on the “struggling Vikings” in the Nordics, the Legatum Institute warns that Denmark’s labour market performance is struggling.
“Sweden and Denmark have failed to bring unemployment back to pre-crisis levels, while Finland continues to see a rise in unemployment. In contrast, the United Kingdom and the United States have seen unemployment fall to near pre-crisis levels,” the report reads.
Swedish free market economist Nima Sanadaji also wrote in the report that unemployment may be higher than it appears in many of the Nordic countries.
“Early retirement is one of the main, but not the sole, tactics used in the Nordic welfare systems to hide true unemployment,” Sanandaji wrote. “Another example is that unemployed individuals participate in labour market programmes with limited prospects of gaining employment, or are excluded from the labour force for various reasons.”
The institute argues that the ‘Anglo-Saxon’ labour market model seen in the UK and US seemed to be doing a better job of creating jobs after the crisis.
The Legatum Institute, backed by the reclusive billionaire New Zealander Christopher Chandler, ranks the world’s countries according to economy, entrepreneurship, governance, education, personal freedom, health, security and social capital.