Excellent innovation and strong institutional environments are increasingly
influencing economies’ competitiveness, according to The
Global Competitiveness Report 2013-2014, which is launched today by the
World Economic forum. The report’s Global Competitiveness Index (GCI) places
Switzerland at the top of the ranking for the fifth year running. Singapore and
Finland remain in second and third positions respectively. Germany moves up two
places (4th) and the United States reverses a four-year downward trend, climbing
two places to fifth. Hong Kong, China (7th) and Japan (9th) also close the gap
on the most competitive economies, while Sweden (6th), the Netherlands (8th) and
the United Kingdom (10th) fall. Ireland slipped one rank to 28th with countries
such as Qatar, United Emirates, Saudi Arabia and Malaysia ahead of us.
The United States continues to be a world leader in bringing innovative products
and services to market. Its rise in the ranking is down to a perceived
improvement in the country’s financial market as well as greater confidence in
its public institutions. However, serious concerns persist over its
macroeconomic stability, which ranks 117 out of 148 economies.
efforts to tackle public debt and avoid a break-up of the euro have taken the
focus off addressing deeper competitiveness issues. Southern European economies
such as Spain (35th), Italy (49th), Portugal (51st) and notably Greece (91st)
all need to continue addressing weaknesses in the functioning and efficiency of
their markets, boost innovation and improve access to finance in order to help
bridge the region’s competitiveness divide.
Some of the world’s largest
emerging market economies must
also engage business, government and civil society to implement long-overdue
reforms. Of the five BRICS, the People’s Republic of China (29th) continues to
lead the group, followed by South Africa (53rd), Brazil (56th) India (60th) and
Russia (64th). Among the BRICS, only Russia improves its ranking, climbing three
places, while Brazil drops eight places.
Among the Asian
economies, Indonesia jumps to 38th, making it the most improved of the G20
economies since 2006, while Korea (25th) falls by six places. Behind Singapore,
Hong Kong SAR, Japan and Taiwan (China) (12th) all remain in the top 20.
Developing Asian nations display very mixed performances and trends: Malaysia
places 24th while countries such as Nepal (117th), Pakistan (133rd) and
Timor-Leste (138th) are near the bottom of the ranking. Bhutan (109th), Lao PDR
(81st) and Myanmar (139th) join the index for the first time.
In the Middle
East and North Africa, Qatar (13th) tops the region’s rankings, with the
United Arab Emirates (19th) entering the top 20 for the first time. Saudi Arabia
(20th) falls two places but remains among the top 20. Israel ranks 27th. Egypt
(118th) drops a further 11 places on last year’s index. Bahrain (43rd), Jordan
(68th) and Morocco (77th) also decline. Elsewhere in the region, Algeria moves
up to 100th place and Tunisia re-enters the index at 83rd.
Africa, Mauritius (45th) overtakes South Africa (53rd) as the region’s most
competitive economy. With only eight countries in the region featuring in the
top 100, profound efforts across the board are clearly needed to improve
Africa’s competitiveness. Among low-income economies, Kenya makes the biggest
improvement, rising by ten places to 96th position. Nigeria (120th) continues to
be ranked low, highlighting the need for it to diversify its economy.
Despite robust economic growth in previous years, Latin
America continues to suffer from
low rates of productivity and the results show overall stagnation in
competitiveness performance. Chile (34th) continues to lead the regional
rankings ahead of Panama (40th), Costa Rica (54th) and Mexico (55th), which all
remain relatively stable.
“Innovation becomes even more critical in terms of an economy’s ability to
foster future prosperity,” said Klaus Schwab, Founder and executive chairman of
the World Economic Forum. “I predict that the traditional distinction between
countries being ‘developed’ or ‘less developed’ will gradually disappear and we
will instead refer to them much more in terms of being ‘innovation rich’ vs.
‘innovation poor’ countries. It is therefore vital that leaders from business,
government and civil society work collaboratively to create education systems
and enable environments which foster innovation.”
Xavier Sala-i-Martin, professor of economics, Columbia University, USA, said:
“The report highlights
a shift in the narrative of the global economy from one year ago, when
fire-fighting still characterized much of global and regional economic policy.
This has now given way to an increasing urgency for leaders to make wide-ranging
structural reforms to their economies.”
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