The geopolitical and trade tensions have been “fueling uncertainty” around the world. It holds back investments and increases the risk of supply shocks. The World Economic Forum has published its 2019 Global Competitiveness Index (GCI). It measures the competitiveness of 141 economies based on 103 indicators categorized into 12 pillars. The WEF said in its report that the world economy was unprepared for a major financial crisis. Most economies are still stuck in a cycle of low productivity growth. Here we take a look at the top 10 most competitive economies of 2019.
The WEF has been publishing the Global Competitiveness Index since 1979. It looks into factors such as the labor market, macro-economic stability, innovation capability, infrastructure, health, financial system, and business dynamism. Klaus Schwab, executive chairman of WEF, said that the GCI provides a “compass for thriving in the new economy where innovation becomes the key factor of competitiveness.”
The GCI report would act as a guide for policymakers across the globe. It would help them identify areas of improvement. The WEF pointed out that the environmental and sustainability agendas must be fully integrated with economic progress.
Denmark retains the same spot as last year, even though its performance improved in ten of the 12 pillars. It has an excellent financial system and institutions. Denmark also benefits from a strong labor market, a stable economy, a skilled workforce, and the widespread adoption of information technology. Denmark also scores high in infrastructure. However, the WEF added that the country could have improved its labor market by relaxing regulations on wages and hiring foreign workers.
9- United Kingdom
The United Kingdom has slipped one spot from last year to occupy 9th position this year with an overall score of 81.2. Despite the Brexit saga, the UK’s biggest strength remains its macro-economic stability. The country also boasts an efficient labor market, a skilled workforce, and a robust financial system. It lags behind its peers in the adoption of information technology.
Sweden also received an overall score of 81.2, the same as the UK. It’s the fourth most competitive economy in Europe. It ranks highly in terms of innovation capability, skills, macro-economic stability, financial system, and the adoption of information technology. It is also one of the world’s healthiest and happiest countries. Two things holding it back are its relatively smaller market size and the not-so-efficient labor market.
Germany slipped four places to 7th spot this year, and its overall score declined by one point to 81.8. The European economic powerhouse lost points in 53 of 103 indicators, and gained only in 18. Germany ranked 1st in terms of innovation capability and macro-economic stability. Its other strengths are business dynamism, large market size, a skilled workforce, and an efficient labor market. It performed poorly in the adoption of information technology.
Japan received an overall score of 82.3. It slipped one place from last year. The country scored highly for innovation capability, health, infrastructure, and market size. It has also been at the forefront of information technology adoption. But Japan’s labor market is not that strong due to relatively lower female participation. Another aspect where it struggles is macro-economic stability.
Switzerland also witnessed its overall score go down slightly from 82.6 in 2018 to 82.3 this year. The European nation ranks highly for macro-economic stability, health, skills, labor market efficiency, infrastructure, and institutions. It’s the third most innovative country in the world, right behind Germany and the United States. But Switzerland is held back by its small market size and slow adoption of information technology.
4- The Netherlands
The Netherlands jumped two places to 4th spot this year, even though its overall score remained the same at 82.4. It has dethroned Germany as Europe’s most competitive economy, says the WEF report. The country performed well in terms of business dynamism, skills, health, infrastructure, and institutions.
3- Hong Kong
Hong Kong is a special administrative region of China. It’s one of the world’s most business-friendly and expensive places. Hong Kong jumped four spots to become the third most competitive economy this year. Its overall score also went up from 82.3 to 83.1. Hong Kong has a well-developed infrastructure, a robust financial system, and a strong labor market. It’s held back by the innovation capability and small market size.
2- United States
The United States slipped to second place this year as its overall score declined from 85.6 to 83.7. The US remains an innovation powerhouse. It also scored highly for business dynamism, market size, and the financial system. It performed poorly in terms of health, macro-economic stability, and the adoption of information technology.
Singapore is the world’s most competitive economy with an overall score of 84.8. It is one of the biggest winners in the US-China trade war. The Asian nation ranked 1st for health, infrastructure, and labor market; and came second in terms of the financial market, institutions, and product market. Singapore was held back by its small market size. The country is staring at its weakest annual GDP growth since the 2009 financial crisis.