National economies around the world are highly competitive with, and dependent on, one another. Increasingly, investors and businesses need to be concerned with the standards of living around the world. While measuring international standards of living is not an exact science, established methods exist for comparing nations to one another.
Nonprofit organizations and policy research groups focus on several factors when calculating international standards of living. Some of these factors are objective statistics such as average life expectancy, childhood mortality rate and per capita income. More subjective measures include satisfaction ratings based on surveys answered by residents of each country. The philanthropy organization GiveWell sees a direct correlation between subjective factors like satisfaction and subjective factors, such as income. Measuring and weighting these factors produces a standard of living index, which varies from study to study but is specific for each nation analyzed.
Highest and Lowest
One of the most reliable and accepted indexes for an international standard of living is the United Nations' Human Development Index. The index looks at a variety of factors and ranks developed nations with high per capita incomes as having the greatest standard of living. These place Norway, Sweden, Australia, Canada, the Netherlands, Belgium, Iceland, the United States, Japan and Ireland in the top 10. The lowest standards of living, according to the U.N., are in developing economies in Africa, including Burkina Faso, Niger and Sierra Leone.
Many government organizations and nonprofits seek to close standard of living gaps among nations. These efforts focus on a variety of factors and proposed solutions. Given the complexity of international economics, these groups seek to improve medical care, education and access to job training in developing economies. They also focus on human rights, working to ensure that residents of countries with low standards of living have their rights preserved and receive fair treatment from governments, courts and employers.
Investors, business leaders and financial analysts all need to understand international standard of living comparisons to succeed in their work. Rising standards of living in developing countries mean new opportunities to export goods as consumer purchasing power rises in those countries. Labor markets and costs also tend to shift as standards of living rise.
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