Business & Money | Wednesday 28 September, 2016 5:20 pm |

A new report by The Boston Consulting Group (BCG) reveals that, when it comes to its current-level Sustainable Economic Development Assessment (SEDA) scores, the UAE outperforms the GCC and the rest of the world in most dimensions—including income, employment, education, infrastructure, civil society, governance, and environment. Across these dimensions, the UAE topped the average scores of both the GCC and the rest of the world.

 

The dimensions in which the UAE lags behind other GCC countries are economic stability, health and income quality. Interestingly, while the UAE showed the strongest recent progress scores in governance and civil society—compared to the GCC region and the rest of the world—it is certainly losing ground across other dimensions.

 

In addition, the analysis shows that the UAE is not effectively converting its wealth into well-being—or its economic growth into well-being improvements for its citizens. In fact, on both these fronts, the UAE’s performance is below par globally.

 

The report also discusses the need for the private sector to contribute to improving a country's wellbeing, and specifically looks at the role of the banking sector at creating financial inclusion.  

 

“We have found a clear and measurable association between financial inclusion—access to basic financial services such as a bank account—and national well-being,” said Douglas Beal, BCG's Director of Social Impact and an author of the report. “Today, in the UAE, private sector innovation can play a significant role in improving living standards. But to make meaningful progress in this area, banks must pursue financial inclusion using their core business, and not just pursue typical corporate social responsibility strategies.”

 

The findings are based on BCG’s latest study of worldwide economic growth trends using the firm’s Sustainable Economic Development Assessment (SEDA). The fact-based, comprehensive analysis measures the relative well-being of 163 countries—including the UAE—through ten key areas, including economic stability, health, governance, and environment. SEDA scores countries in two ways: the current level of well-being and recent progress in well-being from 2006 to 2014. It also assesses how countries convert wealth and growth into well-being. [1]

 

The report, titled The Private-Sector Opportunity to Improve Well-Being: The 2016 Sustainable Economic Development Assessment, was released in July.

 

SPOTLIGHT ON THE UAE

Overall, when looking at the UAE’s current level of well-being as well as its recent progress in that measure, the nation finds itself in the ‘good but losing ground’ category.

 

From a regional perspective, the UAE’s current-level scores are mostly above par. In terms of recent-progress scores, when stacked up against the average of the GCC, the nation shows strong gains in sustainability measures—including civil society, governance, and environment. However, there is no denying that it is falling further behind in other areas such as income, economic stability, employment, health, education, and infrastructure.

 

All in all, when assessing the UAE’s performance versus the rest of the world, it is clear that across various dimensions—such as civil society, governance, education, and infrastructure—the nation is higher and moving further ahead. 

 

Based on BCG’s SEDA analysis, the UAE is lower and falling further behind in economic stability—when pitted against the rest of the world. BCG’s report also reveals that, on a global level, the UAE trails behind other countries in converting both wealth and growth into well-being. 

 

THE IMPORTANCE OF FINANCIAL INCLUSION

The 2016 SEDA report took a close look at the issue of financial inclusion. The analysis found that the strong link between well-being, as measured by SEDA, and financial inclusion existed even when controlling for income. 

 

“This means that among countries with the same income (GDP per capita) level, those with higher levels of financial inclusion are likely to have higher well-being levels,” added Beal. “Our study finds that two factors are critical to improving financial inclusion: a regulatory structure that provides safeguards but allows innovation and a solid infrastructure, including communications networks and payment systems. With those two elements in place, private-sector innovation in the UAE can flourish.”

 

GLOBAL RESULTS

Highlights of the study’s key global findings include:

 

·         The United States’ performance in converting both wealth and growth into well-being is below par globally, while Germany's performance is above par on both counts. The UK's strong performance in converting wealth into well-being is being threatened by its recent subpar conversion of economic growth into well-being improvements.

·         A  European divide: Among countries in Western Europe, those with high current levels of well-being (Austria, Denmark, Finland, Germany, the Netherlands, and Norway) are making greater progress than those with low current-level scores (Cyprus, France, Greece, Italy, Malta, Portugal, and Spain), particularly in employment and education. These countries, concentrated in southwest Europe, are performing particularly poorly in employment and are falling further behind the rest of the world in that area.

·         Central and Eastern European countries that have recently joined or are in the process of joining the EU have made strong gains in sustainability measures, which include income equality, civil society, governance, and the environment

·         China is converting wealth into well-being at a rate slightly above par and—remarkably, given its very high growth rate—is converting growth into well-being at par. China continues to score low on the environment, however. India also produced strong recent progress improvements but converted its strong growth into well-being at a rate slightly below average. India also leads the pack in progress on financial inclusion, as nearly 200 million people have gained access to financial services.

·         Peru has outstripped Brazil’s recent progress in well-being with strong gains in employment and education.

·         Ethiopia holds the top spot when it comes to recent progress in well-being. Ethiopia’s performance is emblematic of gains in sub-Saharan Africa as a whole.