Sustainable Economic Development Assessment

BCG’s Sustainable Economic Development Assessment (SEDA) is a proprietary diagnostic tool that gives countries insight into their overall social and economic conditions.

Without a doubt, there is a connection between a country’s wealth and economic growth and improvements to its overall well-being. So rather than focusing solely on GDP per capita—the most frequently used indicator of a country’s general welfare—SEDA is primarily an objective measure that combines data on outcomes, such as in health and education, with quasi-objective data, such as governance assessments. It is also a relative measure that assesses how a country performs relative to either the entire universe of 152 countries or to individual peers or groups.

SEDA offers a current snapshot as well as a measure of progress over time, and it complements purely economic indicators like GDP. (See Appendix for details on the SEDA methodology.)

SEDA does not include purely subjective measures.  Other metrics based on subjective measures—such as the ones used in the UN’s Happiness Report—offer valuable complementary, but separate, analysis.  In fact, BCG has found a strong overall positive correlation between the UN’s Happiness scores and SEDA scores.

SEDA defines well-being on the basis of ten dimensions grouped into three categories.

• Economics includes the dimensions of income, economic stability, and employment. 
• Investments includes the dimensions of education, health, and infrastructure, which reflect the outcomes of policies and programs that account for the bulk of any government's nondefense expenditures. 
• Sustainability comprises the environment and three contributors to social inclusion: equality, a strong civil society, and sound governance.

Using indicators from publicly available sources, SEDA assesses country performance for each dimension. The assessment relies on a total of 40 indicators based on the most recently available data. Each indicator’s measure is normalized on a scale of 0 (the lowest score among the 152 countries) to 100 (the highest). Based on those normalized indicators, a score is calculated for each of the 10 dimensions. The scores provide insight into well-being in three ways:

SEDA Score

Aggregating the scores for the 10 SEDA dimensions provides an overall current-level score for each country. This score can be used to compare a country with any other country or group of countries. In general, wealthier countries tend to have higher current-level scores than less wealthy countries. SEDA's 10 dimensions also provide a framework for reviewing priorities for remedial action, since a country's performance relative to the rest of the world or a group of peers can highlight critical strengths and weaknesses. Armed with such insights, governments can begin to set strategies for addressing the most pressing issues.

Change in SEDA Score

The 2019 analysis takes a new approach to measuring the recent progress countries are making. Drawing on 10 years comparable SEDA scores, BCG now tracks the change in SEDA score over that period. We can also track changes in each dimension of the SEDA score.

Wealth to Well-Being Coefficient

Using SEDA scores, BCG examines how well countries are able to convert their wealth (as reflected in income per capita) into well-being. We do this using a measure called the wealth to well-being coefficient. This coefficient compares a country’s SEDA score with the score that would be expected given the country’s GNI per capita. The coefficient thus provides a relative indicator of how well a country has converted its wealth into the well-being of its population. 

Countries with a coefficient of 1.0 are generating well-being in line with what would be expected given their income levels. Countries that have a coefficient greater than 1.0 deliver higher levels of well-being than would be expected given their GNI levels, while those below 1.0 deliver lower levels of well-being than would be expected.