Leaders around the world increasingly recognize that GDP alone cannot give a full picture of a country's performance. The well-being of citizens is an even more important measure. The Boston Consulting Group’s Sustainable Economic Development Assessment (SEDA) is a powerful diagnostic designed to provide government leaders with a perspective on how effectively their countries convert wealth, as measured by income levels, into well-being. But while the public sector is increasingly focused on well-being and how to enhance living standards, it has not been clear what role there is—if any—for the private sector.
Our research shows that the private sector can make crucial contributions to well-being. When scalable, sustainable solutions to social challenges emerge, we often see the private sector playing a central role. Such efforts go beyond corporations' support for social or environmental causes that are unrelated to their primary business—often part of corporate social responsibility initiatives. Rather, companies can innovate within their core business models in a way that not only enhances shareholder value but also helps address important societal challenges.
To understand the opportunity for the private sector to make a meaningful social impact, we took a close look at the financial services sector and the issue of financial inclusion: access among underserved groups to services such as simple payment and money transfer services, deposit accounts, credit, and insurance. Among our most compelling findings: there is a clear and measurable link between financial inclusion and well-being. And this connection holds even when we control for income, which means that it is not due simply to wealthier countries' higher levels of both well-being and access to financial services.
In addition to the insights on financial inclusion, our 2016 assessment highlighted some interesting stories:
- Countries in sub-Saharan Africa such as Ethiopia are making tremendous strides in improving well-being; 15 countries in sub-Saharan Africa are in the top quintile in that measure.
- Developed countries with relatively high current levels of well-being posted weak improvements in general. Greece had the lowest score for recent progress in well-being among the countries we assessed.
- To better understand the dynamics in Europe, we divided Western European countries into three tiers by their scores in current level of well-being. The low-level countries, concentrated in southwest Europe, are performing particularly poorly in employment and are falling further behind the rest of the world in that area.
- In a period of turmoil within the European Union, SEDA reveals that EU membership may have a significant positive effect in certain areas. Several Central and Eastern European countries are among those with the highest recent progress in sustainability (which includes income equality, civil society, governance, and environment). Those countries have recently joined or are in the process of joining the EU, and their gains are probably influenced by EU policies and standards.
- China continues to produce well-being improvements in line with its rapid economic growth. India has a high recent-progress score, although its ability to convert its strong GDP growth into well-being improvements is slightly below average.