Switzerland is the world’s most competitive economy in 2016
Switzerland is the world’s most competitive economy for the eight straight year while Ireland has moved up one rank to 23rd of 138 nations according to the World Economic Forum's Global Competitiveness Report 2016/2017. India jumped 16 ranks to 39th.
In a time of “persistent slow growth" the report says it is a “critical reminder of the importance of competitiveness in solving both our international macroeconomic challenges and laying the ground for future prosperity.”
For the eighth consecutive year, Switzerland ranks as the most competitive economy in the world, narrowly ahead of Singapore.
The US is 3rd, a position it has occupied since the 2014-2015 report. Innovation, market size and financial market development are among the areas of strength.
The rest of the top 10 is dominated by European economies, with Japan and Hong Kong also featuring in 8th and 9th respectively.
Switzerland achieved top ratings in four of the 11 criteria: labour market efficiency, business sophistication, innovation and technological readiness. Its weaknesses are seen as deepening deflation, low levels of women participating in the workforce and the amount of red tape holding back the creation of new companies.
“Switzerland arguably possesses one of the world’s most fertile innovation ecosystems,” the report states. It adds that Swiss companies have “an unmatched capacity to attract the best talent and large multinationals.”
Singapore takes second place behind Switzerland for the sixth year in a row. Strong infrastructure, higher education and training, and goods market efficiency propels the Asian nation to its high ranking.
Of the 112 individual indicators that make up the Global Competitiveness Index, 14 could be directly negatively impacted by Brexit.
On the other hand, the report says three (potentially six) of the 112 indicators have the potential to make a direct positive impact on the UK’s score and thus rank.
Key to the UK’s competitiveness going forward will be how successful it is in minimizing the potential downside from those 14 indicators while maximizing any upside from those that could have a positive impact.
The three top problems for Ireland are 1) inadequate supply of infrastructure 2) tax rates and 3) access to financing.
The Global Competitiveness Report’s competitiveness ranking is based on the Global Competitiveness Index (GCI), which was introduced by the World Economic Forum in 2005. Defining competitiveness as the set of institutions, policies and factors that determine the level of productivity of a country, GCI scores are calculated by drawing together country-level data covering 12 categories – the pillars of competitiveness – that collectively make up a comprehensive picture of a country’s competitiveness. The 12 pillars are: institutions, infrastructure, macroeconomic environment, health and primary education, higher education and training, goods market efficiency, labour market efficiency, financial market development, technological readiness, market size, business sophistication, and innovation.