The 2015 Change Readiness Index says growing wealth disparity is making it harder for many countries to deal with natural disasters and social unrest

This article is more than 5 years old

This article is more than 5 years old

Economic inequality will make it harder for countries to weather crises such as natural disasters and social unrest in the future, a study has shown.



The 2015 Change Readiness Index (CRI) measured the ability of governments, businesses and civil societies in 127 countries to handle economic change and take advantage of investment opportunities.

It evaluated each country’s quality of governance by looking at macroeconomic frameworks, business environments and the rule of law. Researchers also considered the freedom and influence of civil society groups.

Economic inequality was seen as the greatest threat for many nations, leaving them vulnerable to financial shocks, according to the CRI, which was released on Tuesday by KPMG and Oxford Economics thinktank.

A recent study by Oxfam on extreme wealth inequality said 85 of the world’s richest people had the same wealth as half of the world’s population.

Worsening inequality can lead to or exacerbate conflicts and reduce social cohesion Change Readiness Index

Uneven economic growth does not reduce poverty as quickly as growth that is spread across societies, the CRI said. It also warned that worsening inequality can “lead to or exacerbate conflicts and reduce social cohesion”.

The 2015 index said Namibia, Haiti and Guatemala had the least inclusive economic growth.



Some low-income countries ranked higher than expected in the CRI. Trevor Davies, executive director of KPMG’s International Development Assistance Services (Idas), said this was because of economic diversification, a strong rule of law, and educational opportunities.

“We’ve found that the countries that do well are the ones that actually focus not just on the economic side, but also on bringing about good governance and improving the lot of their people – so making sure that the economic benefit flows through inclusively to their population,” said Davies.



Mozambique, which came 80th in the index, performed better than any other low-income country, based on projections of gross national income. Uganda, Cambodia and Tanzania also ranked high in the index.

Timothy Stiles, chairman of Idas, said: “Many countries compensate for lesser wealth with robust governance, a strong social foundation, and a positive business environment.”

Algeria registered the biggest gain in this year’s rankings, because of “impressive improvements in its enterprise and government capability”, the report said.



The Philippines’ strong political institutions demonstrated the importance of good governance in recovering from natural disasters, according to Davies. “Much of the country was devastated by typhoon Haiyan in 2013, but the Philippines’ effective policies and institutions have enabled it to persevere, and it is projected to be one of the world’s fastest growing economies in 2015.”

The index showed that the volume of national income is the most significant factor in determining change readiness, with the top 22 spots in the index going to high-income countries. Small countries with high gross national income are the best positioned to handle economic shocks and take advantage of investment, the report said.

Singapore came top, followed by Switzerland, Hong Kong, Norway, the United Arab Emirates, New Zealand, Qatar, Denmark, Sweden and Finland.

The report combined data from 22 primary survey questions that were gathered from 1,270 country experts around the world. Data sources included the World Economic Forum, World Bank, Legatum Institute, International Monetary Fund and United Nations.

