The world's best economies, past, present and future

There appears to be strong vindication for former treasurer Wayne Swan from a formula just published in Australia's alternative media.

The assertion has often been made in recent years, including here at On Line Opinion (OLO), that Australia emerged from the global financial crisis (GFC) as the world's strongest economy. This is now bolstered by arithmetic emerging from social media debate.

The more contentious claim that Australia's ascendancy is due to the Rudd Government's stimulus packages of 2008-10 seems also supported.

Over the last year or so, this writer has engaged robustly with several OLO authors and readers on the thorny issue of how economic management may be measured and compared internationally. These include extended online discussions last April and May, and also in August here, here and here.

These led directly to the development of a fairly simple formula which includes eight variables. These are income, growth rate, wealth, jobs, inflation, taxation, government debt and economic freedom.

Details of the construction of the formula, its assumptions and limitations, are available at another Australian online publication.

Each variable is derived from accessible online data, so calculations are readily replicated by anyone with spreadsheet software and internet access.

Primary data sources are the World Bank, the International Monetary Fund, Credit Suisse, tradingeconomics.com and Heritage Foundation.

The first application was to score and rank all economies in the world according to overall health on those eight criteria at the end of 2013. The top ten were:

1. Australia 30.23
2. Norway 28.58
3. United Arab Emirates 28.48
4. Singapore 28.13
5. Switzerland 27.95
6. Luxembourg 27.60
7. Canada 23.39
8. Kuwait 22.91
9. Sweden 22.29
10. New Zealand 21.27

The second application, published last Sunday, ranked economies before the onset of the global financial crisis. The top ten economies in 2007 were:

1. Norway 31.32
2. Iceland 31.27
3. Luxembourg 30.84
4. Kuwait 28.51
5. Finland 27.72
6. Hong Kong 26.39
7. Singapore 26.20
8. United Arab Emirates 26.00
9. Australia 25.83
10. Switzerland 25.25