By IESE Insight
Which countries are currently doing the most to boost their competitiveness and thus their productivity? According to The Global Competitiveness Report 2015-2016, which ranks and profiles 140 economies representing more than 98 percent of the world’s GDP, the top marks go to Switzerland, Singapore and the United States — in that order.
Against a backdrop of lower productivity growth, lower economic growth and higher unemployment — especially among youth — competitiveness matters. Published by the World Economic Forum (WEF), the Global Competitiveness Report emphasizes the importance of a country’s competitiveness for crisis recovery and for withstanding future economic shocks. IESE professor Antoni Subirà and researcher Maria Luisa Blázquez serve as collaborating members of the World Economic Forum in Spain for the compilation of the report.
“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,” explains Xavier Sala-i-Martin, chief advisor of the Global Competitiveness Report, in the WEF’s press release.
Joining Switzerland in this year’s global top 10 are five more European nations: Germany (4th), the Netherlands (5th), Finland (8th), Sweden (9th) and the United Kingdom (10th). Joining Singapore are two more Asian economies: Japan (6th) and Hong Kong SAR (7th).
Shifting Geographic Patterns of Growth
Advanced economies, such as the United States, are gaining ground compared to many emerging markets as global growth continues to be sluggish. Looking at GDP growth back in 2013, emerging markets’ annual growth outpaced advanced economies’ by a large margin: 5 percent versus 1.3 percent. Yet in 2015, emerging markets are growing less than twice as quickly as their advanced peers: 4.2 percent versus 2.1 percent, as quoted in the report. The latest data on competitiveness echoes these growth trends, with certain advanced economies doing much more to ensure future productivity.
“The failure, particularly by emerging markets, to improve competitiveness since the recession suggests future shocks to the global economy could have deep and protracted consequences,” the WEF warns in its press release.
The Ranking: 12 Pillars
The 140 economies in this year’s report are evaluated according to 12 pillars of competitiveness: 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. The world’s top performers — particularly Switzerland, Singapore and the United States — stand out for nurturing innovation and talent year after year. In fact, Switzerland’s number one ranking has held for seven years in a row, as it continues to score well for all 12 pillars.
Meanwhile, elsewhere in Europe, both Spain and Italy are making progress in bolstering competitiveness. Spain climbs two spots from 35th to 33rd, thanks mainly to increased efficiency in its labor, goods and financial markets. Italy is also improving its market efficiency, climbing six spots — from 49th to 43rd. At the same time, improvements in the product and labor markets in France (22nd) and Portugal (38th) are being outweighed by weakening performances in other areas. Greece remains at 81st place this year, based on data collected prior to the bailout in June.
Among the world’s most-watched emerging markets, there is some bad news. Brazil (75th) is losing traction amid instability and a loss of trust in public institutions. Turkey (51st) is facing similar difficulties. China holds steady at 28th, the highest rank for an emerging economy. That said, China’s lack of upwards momentum may spell trouble in the future as its economy transitions.
In the good news column, India reversed a five-year-long downward trend to jump a spectacular 16 spots to 55th this year.