The Legatum Prosperity Ladder™ is a simple framework illustrating how we allocate capital, energy and ideas to support our ambition of helping others prosper.
At the very core of the Legatum Prosperity Ladder™ is the big, simple idea that ‘business is development’.
At the bottom of the ladder are hundreds of millions of people around the world who live below the poverty line and are caught in subsistence living, who are unable to generate surplus capital, improve their skills through education or access credit.
Well-directed aid (public and private) can provide the capital required to break this cycle and provide the means for progress. Legatum invests capital into philanthropic initiatives at the bottom of the ladder to provide an opportunity for people to better their own circumstances.
We believe that aid plays an important but limited role in development. Communities grow through economic opportunity which comes about through an alchemy of good governance, cultural transformation, education and an enabling business environment.
We therefore allocate capital carefully to avoid crowding out private capital in order to assist beneficiaries to help themselves.
As markets and societies become increasingly developed, surplus capital is created, reducing financing costs and improving access to credit and equity. This enables households to invest in housing and education, and entrepreneurs to start and grow businesses. This in turn fuels the growth of larger enterprises, helping to create jobs, providing consumers with better access to services, increasing competition, improving the legal and regulatory environment and delivering many other social benefits.
In addition, in vibrant free markets, surplus capital generated at the top of the ladder is recycled as seed capital to support new entrepreneurial ventures and as philanthropic grant aid to help those beneath the poverty line.
This virtuous circle is the reason we use the phrase ‘business is development’, as business is the most effective vehicle for creating social transformation and prosperity.