Australia Ranked in Top 10 Most Inclusive World Economies

A new international report has placed Australia in the top 10 most inclusive economies in the world in a list dominated by northern European countries.

The World Economic Forum’s Inclusive Development Index (IDI) ranks the world’s advanced and developing economies based on their performance against key performance indicators ranging from poverty and inequality to public debt and environmental factors. The annual forum is currently taking place in Davos, Switzerland.

The Inclusive Growth and Development Report 2017 places Australia in eighth position with New Zealand coming in ninth.

The report looked at education, infrastructure, ethics, investment, entrepreneurship and social protection as some of the factors playing into creating a country’s economic policy.

It said Australia ranked particularly highly for aspects such as fostering an entrepreneurial culture.

“The country is also delivering quite well in terms of intergenerational equity but could do more to broaden the distribution of income and wealth,” the report said.

“The framework indicates that Australia’s economy is particularly characterised by strong asset-building, entrepreneurship, and new business creation (ranked third among advanced economies). This is thanks to its supportive regulatory framework and lack of red tape, as well as healthy access to finance for business creation and development.

“Access to education is excellent, though its quality could be improved, as could the equity of outcomes for students from different income levels. There is also scope to increase the participation of women in the workforce, for example through more-affordable child care, which could help to lower the high rates of temporary and involuntary part-time employment.

“Australia could also make further use of fiscal transfers, improving the generosity of social protection benefits, to ensure more equitable outcomes from growth.”

Norway topped the list with high and rising living standards, effective social protection and low inequality. The report said Norway had a high degree of social mobility, low unemployment and a large share of women participating in the labour force, helped by sound parental leave policies and affordable childcare.

Luxembourg and Switzerland came in second and third place. The report said this was driven by robust growth and employment, high median-living standards, strong environmental stewardship and low public debt.

In fourth place, Iceland had also showed the greatest improvement over the past five years, together with New Zealand and Israel.

Denmark, Sweden and the Netherlands followed, buoyed by high living standards and good social protection. Austria completed the top 10.

The report said room for improvement for these top performing countries frequently surrounds reducing wealth inequality, which has risen in 77 per cent of economies globally, and intergenerational equity.

Among developing economies, Lithuania, Azerbaijan and Hungary lead the index with Lesotho, Nepal and Georgia having improved the most since 2011.

The World Economic Forum report also proposed a shift in economic policy priorities to respond more effectively to the effects of technological change and globalisation such as insecurity and inequality.

The report concluded that most countries were missing important opportunities to raise economic growth and reduce inequality at the same time because the growth model and measurement tools that have guided policymakers for decades require significant readjustment.

The report argued that sustained, broad-based progress in living standards, a concept that encompasses income as well as economic opportunity, security and quality of life, should be recognised by policymakers as the bottom-line objective of national economic performance rather than gross domestic product (GDP) growth.

The Australian minister for trade, tourism and investment, Steven Ciobo, is attending the WEF with other government representatives.

“The World Economic Forum presents a significant opportunity to promote Australia as an investment destination and engage in dialogue with the global community on major economic challenges on the horizon,” he said.

The full report can be downloaded here.