A new report by the Boston Consulting Group (BCG) looks at how wealth and well-being are linked – and where countries should put their focus when trying to improve both.
“Promoting the well-being of citizens is widely accepted as the primary goal of national policy and government action—in principle,” BGC said.
“In practice, however, decision makers face what are generally viewed as competing priorities: improving citizens’ well-being or fostering economic growth.”
According to the group, it now has data that suggests these two goals are not mutually exclusive, and that there is no need to choose between well-being and growth.
The latest Sustainable Economic Development Assessment (SEDA) analysed 152 countries and used data from 2007 through 2016, finding that countries which were better at converting wealth into well-being tended to have faster economic growth.
They also tended to be more resilient—recovering more quickly from the 2008–2009 financial crisis, it said.
To understand how well-being has changed on an absolute basis, BCG looked at over 40 indicators in 10 main groups, and compiled SEDA scores on a scale of 0 to 100. This shows how countries performed relative to each other.
This was then plotted on a graph showing levels of wealth in every nation, showing how countries with similar income levels can still have different well-being scores.
South Africa is regarded as one of 36 global power houses, being one of the most populous countries in the world – however, it fares relatively poorly at converting wealth to well-being, rating below economies of a similar size.
On the overall ranking, South Africa placed 113th, ranking just outside of the lower quartile.
Along with most other Sub-Saharan nations, South Africa has limited resources to direct towards areas that bolster well-being, and also struggles to convert the wealth that it does have, the researchers said.
Looking at a breakdown of the factors that make up the SEDA score, it’s clear that South Africa suffers, generally, but in two areas specifically – employment and income.
According to BCG, for counties with a relatively low level of well-being – such as South Africa – it is not enough to focus only on areas of development, such as education and health, but economic areas need to be improved as well.
This includes employment, governance and economic growth – an area where South Africa struggles.
South Africa has a notoriously and stubbornly high level of unemployment – currently sitting at 27.7% using the narrow definition – a position that is only going to be under further stress in the future, as new technologies and the rules surrounding global competition evolve, BCG said.
Income, meanwhile, reflects wealth (as measured by GDP per capita) – with South Africa’s low score meaning the country already has a limited pool of money to filter into avenues that would boost well-being.
According to the report, South Africa’s GDP per capita is currently sitting at $5,480 per person (75th, overall), with a wealth-to-well-being coefficient of 0.85 (with 1.00 being the ‘standard’ level of well-being one would expect from a country’s income levels).