One hundred years ago, on his 26th birthday, my maternal grandfather traveled halfway around the world — by train, ship, car, and foot — to win the hand of the woman he loved.

A landless farm laborer perceiving a bleak economic future in his central Norwegian village, Sivert Torseth packed all his worldly possessions in a small wooden chest about the size of carry-on luggage and journeyed to the Pacific Northwest region of the U.S. There he landed work as a logger, proved his mettle to his father-in-law back in Norway, and saved enough money to send for his beloved bride, Marit, a year later.

In leaving for the U.S., Sivert and Marit followed nearly 1 million other mostly low-income and working-class Norwegians seeking economic opportunity on faraway shores in the late 1800s and early 1900s. In fact, 19th century Norway lost a higher proportion of its people to the U.S. than any other country except Ireland. Norway’s Nordic neighbors — Sweden, Denmark, and Finland — all experienced similar exoduses.

Today, ambitious 20-somethings in Norway and its neighboring countries no longer flock to the U.S. looking for opportunity. Why would they? Norway, Sweden, Denmark, and Finland have themselves become Valhallas — lands of opportunity for the visionary, the brave, ambitious, hardworking, or gifted. In the Legatum Institute’s Prosperity Index, which measures quality of life, wealth, economic growth, personal well-being and more, Denmark tops the list of 167 countries measured, followed by Norway, Sweden, and Finland.

What if we considered only social and environmental factors and removed the economic ones? Well, The Social Progress Index does just that, measuring the well-being of societies by observing only social and environmental factors such as wellness, equality, inclusion, personal freedom, and safety. Who tops the list of 168 countries? Norway, Finland, and Denmark, followed closely by Sweden in the number seven spot.

If he lived today, my grandfather likely would not leave his homeland to find opportunity, a fact borne out by the World Economic Forum’s Global Social Mobility Index 2020. It measures “equal opportunity” — the ability of a child to climb the socioeconomic ladder beyond their parents’ station. Denmark, Norway, Finland, and Sweden took the top four spots in the latest index. Yes, the American dream is alive and well — in the Nordic countries, that is.

In perhaps the most important indicator of all, measured in the World Happiness Report, all four of these Nordic countries crowd the Top 10 list year after year. The Happiness Report measures human well-being across six factors: gross domestic product per capita, healthy life expectancy, freedom to make life choices, generosity, social support, and freedom from corruption.

Understanding what is driving the rise of the Nordic countries to become a beacon of inclusive prosperity, human rights, and opportunity can help savvy social investors identify the strategic approaches and levers that could conjure similar transformations in other geographies.

When it comes to identifying the chief ingredients of Nordic exceptionalism, myths abound. Observers have variously posited that the Nordic path to progress was accelerated by small populations, homogeneity, and oil wealth, but none of these explanations holds up to even the most casual scrutiny. Consider, for example, the list of the world’s least populated countries; it includes a relatively equal number of high-income (Monaco: population 38,960) and low-income countries (Dominica: population 71,810). In addition, Nordic countries are not homogeneous: nearly one in five people living in Sweden is an immigrant. What’s more, researchers have found no relationship between the health and wealth of a country and levels of immigration or diversity. As for oil wealth, Norway and Denmark have it. Sweden and Finland have none.

Let’s narrow down what it is about the Nordic countries that makes them exceptional, thereby discerning implications and lessons for social investors.

Researchers have identified multiple key and mutually reinforcing factors across the Nordics that, together, helped produce a shared prosperity and inclusive growth. These factors include well-functioning government institutions, low corruption, high social trust, strong social safety nets, a strong business climate, and relative gender equality.

Good Government Enables Development

Effective and efficient government institutions that promote the greater good, also known as good governance, are correlated with higher income levels, better social outcomes, and higher life satisfaction. While correlations do not prove causation, we know that capable government institutions, sound laws, enforceable rights, and stable policies facilitate growth and development on personal, communal, and business levels.

As Kemal Derviş, a senior fellow at the Brookings Institute once wrote, “It is the nature of governance that determines whether people deploy their talents and energy in pursuit of innovation, production, and job creation, or in rent-seeking and lobbying for political protection.”

The Nordic neighbors regularly place at the top of global good government rankings. In the 2022 Chandler Good Government Index, the four Nordic neighbors took four of the top seven spots.

Low Corruption Promotes Trust

Corruption, or the lack of it, is perhaps the best predictor of the quality of government institutions. High levels of corruption create the perception that the system is rigged. In this way, it acts as a corrosive influence on economic growth, trust, and democracy.

Again, the Nordic countries score in the top four in the global Corruption Perceptions Index, published by Transparency International in January 2022. They have established a virtuous circle where noncorrupt, well-functioning representative government institutions provide citizens extensive benefits and a fair playing field so that citizens trust government institutions and each other. This self-reinforcing trust is an accelerant for positive social outcomes.

Strong Social Safety Nets Matter

Social safety nets, which protect against the vagaries of the market, are strongly linked to citizen well-being and satisfaction — for rich and poor alike. They provide psychological safety for a healthy functioning of society.

Benefits in the Nordic countries include the provision of pensions for the elderly, income maintenance for people who are ill and disabled, unemployment benefits, and universal access to health care; they are among the most comprehensive and generous government social safety nets in the world, according to the 2021 Social Progress Index by Washington, D.C.-based nongovernmental organization Social Progress Imperative.

These strong social safety nets are part of vibrant market capitalist systems in the Nordic countries, which include strong property rights, business freedom, trade freedom, and broad support for workers. The combination of a vibrant business environment with strong social safety nets frees individuals to focus on innovation, creativity, and other routes to a flourishing life.

Women’s Empowerment Benefits All Societies

As I write this article, Denmark, Finland, and Sweden are led by woman prime ministers, and a woman has headed Norway’s government for eight of the last nine years. This is no accident. Finland and Norway were among the first countries to grant women the right to vote. They and their neighbors are global champions of women’s rights. In the United Nation’s Gender Empowerment Measure, which tracks the extent of gender equality across 189 countries, the top four spots are held by Norway, Sweden, Denmark, and Finland.

The Nordics have long recognized that women’s economic empowerment is important not only for their own human rights and happiness, but also because it is deeply connected to both child health and economic growth. What is good for women is good for their families, their communities, and their country.

The Nordics have long recognized that women’s economic empowerment is important not only for their own human rights and happiness, but also because it is deeply connected to both child health and economic growth. What is good for women is good for their families, their communities, and their country.

While the first three factors — good governance, low corruption, and social safety nets — might be strong contributors of a robust ecosystem for progress, it should be self-evident that a world where half the population is not empowered is a world that sabotages its own well-being.

Implications for Social Investors

What are the lessons for social investors seeking similar, positive social outcomes in other countries? One clear takeaway is the unparalleled role of governments in establishing, fostering, and maintaining health, legal, education, business, and social systems that are fair, protect the vulnerable, and support equal opportunity. Capable, enabled, and trusted governments can do more to create social impact at scale and at speed than any nongovernmental organization.

This undeniable impact has nudged an increasing number of NGOs and their donor partners to come around to the notion that they should engage with governments and not “work around” them.

Engaging with governments is not enough, however, if organizations view governments primarily as a source of funding and a tool for helping them achieve more impact.

Perhaps the single most important lever for accelerating progress would be to turn that paradigm on its head and instead ask: How can NGOs engage with governments in such a way as to increase the impact of governments?

Capable and capacitated governments have the tools and reach to do more to create large-scale social impact than the best equipped NGOs. So it can behoove NGOs and their funding partners to focus on helping to create capable and capacitated government systems for lasting impact.

Social investors can start by finding and supporting organizations whose orientation and key performance indicators focus on making governments more effective. Based on the successful Nordic model, this might include work in one or more of the following areas:

Building capacity and capability of public leaders: Achieving good governance requires good public management systems and processes, as well as good leaders. Consider organizations that work with governments to strengthen public sector management systems and processes, or which focus on developing existing or potential public leaders identified as capable and ethical.

Addressing corruption: Consider both organizations that work to prevent corruption by supporting open governments with cultures of integrity, as well as those that address existing corruption by exposing it and punishing wrongdoers.

Evidence-informed policymaking: A key characteristic of good governments is good policy and good policymaking. Many governments around the world are transforming their policies and strategies based on new data-driven learnings supported by NGOs.

Strengthening government systems of education and health: Instead of building parallel systems of education and health, consider support that makes the public system stronger and more capable of providing high-quality, accessible services to the most underserved.

Supporting government policies and systems that close the gender gap: Closing the gender gap is crucial for improving well-being and governments have major roles to play through policies, programs, and practices. The share of funding for women’s and girl’s organizations remains relatively small: less than 2% of the total in the U.S. The subset going to women’s and girl's organizations whose approach primarily centers on governmental change is infinitely smaller.

Today, the number of migrants around the world who are leaving their homelands for economic and social opportunity elsewhere is at an all-time high — an estimated 169 million people. The overwhelming directional flow is from countries with relatively poor governance to those with relatively better governance.

Migrants, like my grandparents Sivert and Marit, know and demonstrate that ambition and talent are evenly distributed around the world, but opportunity is not. Each one of the world’s present 169 million economic migrants has a story to tell. Some are uplifting, ending in safety and triumph; but others end in thwarted hopes or even tragedy. Economic migration should be less common and not driven by a complete lack of opportunity in one’s homeland. It is in every country’s best interest to keep their native talent at home in an environment that enables their creativity to contribute to a shared and growing prosperity.

The Nordic nations have found a winning formula by investing in good governance, preventing and policing corruption, providing strong social safety nets amid a vibrant business environment, and empowering women to achieve relative gender equality. My Nordic heritage might make me a biased author, but the results speak for themselves. Social investors would do well to support elements of that formula elsewhere.