Countries are trying to stay competitive in a world of slowing productivity, dropping oil prices, and a commodity slump. Now the World Economic Forum has published its annual competitiveness ranking of 140 countries.
Switzerland, Singapore and the United States have come out on top of the World Economic Forum’s annual Global Competitiveness Report, an index ranking 140 companies according to productivity and prosperity indicators.
The report’s release on Wednesday marked Switzerland’s seventh year on the top of the index. The authors cited “remarkable resilience” throughout global financial crises and “subsequent shocks”. Singapore and the United States also remained fixed at the number two and three spots, while Germany moved up a rung to No. 4. Rounding up the top five was The Netherlands, a spot it occupied three years ago.
The game is changing
This year’s report has been published at a time of fundamental movements in the world economy. The end of the commodities boom has hit Sub-Saharan Africa, Latin America and the Caribbean especially hard. Dropping oil prices and worsening geopolitical conflict have left their mark on the Middle East and North Africa. China’s economy is slowing after years of double-digit growth.
“The new normal of slow productivity growth poses a grave threat to the global economy and seriously impacts the world’s ability to tackle key challenges such as unemployment and income inequality,” said Xavier Sala-i-Martin, professor of Economics at Columbia University. “The best way to address this is for leaders to prioritize reform and investment in areas such as innovation and labor markets, this will free up entrepreneurial talent and allow human capital to flourish.”
More innovation for a successful revolution
According to the report’s authors, innovation is also a key element in making the most of the so-called “fourth industrial revolution” – the integration of smart, Internet-connected machines and human labor.
“The fourth industrial revolution is facilitating the rise of completely new industries and economic models and the rapid decline of others,” said World Economic Forum founder Klaus Schwab. “To remain competitive in this new landscape will require greater emphasis than ever before on key drives of productivity, such as talent and innovation.”
Recent efforts to improve the functioning of markets and bolster competitiveness boosted Spain and Italy by two and six places respectively. While France and Portugal both enacted labor market reforms, weaknesses in the other areas impacted negatively on their overall competitiveness – France came In 22nd, while Portugal came in 38th.
European problem child Greece retains its spot at No. 81, based on data collected prior to the bailout approved in June.
Some emergent, others divergent
The world’s emerging markets didn’t fare to well on the rankings, many either stagnated or declined outright. But India bucked the trend by jumping a whopping 16 places to rank 55th, reversing a five-year decline. South Africa has just managed to re-enter the top 50, by ascending seven places to No. 49.
Despite the slowdown of its economy, China still remains the most competitive of the group , managing to maintain its position at No. 28. But Brazil and Turkey have tumbled to 51st and 75th respectively, as they both struggle with macroeconomic instability and dwindling trust in their public institutions.
The countries in the ranking were assessed according to 12 indicators including institutions, infrastructure, macroeconomic environment, health and primary education, higher education and training, goods market efficiency, labor market efficiency, financial market development, technological readiness, market size, business sophistication and innovation.