European leaders must act to bridge the competitiveness between member states said the chairman of the World Economic Forum, Klaus Schwab. The growing gap is “the origin of the [economic] turbulence we are experiencing today,” Schwab said, commenting on the World Economic Forum’s annual Global Competitiveness Report, published this week.
Switzerland, for the fourth consecutive year, tops the Swiss foundation’s overall rankings. Singapore remains in second position with Finland overtaking Sweden (4th) in the third position.
These and other Northern and Western European countries dominate the top 10 with the Netherlands (5th), Germany (6th) and United Kingdom (8th). The US (7th), Hong Kong (9th) and Japan (10th) complete the ranking of the top 10 most competitive economies.
European divide
The report indicates that Switzerland and countries in Northern Europe have been consolidating their strong competitiveness positions since the financial and economic downturn in 2008.
On the other hand, countries in Southern Europe, such as Portugal (49th), Spain (36th), Italy (42nd) and particularly Greece (96th) continue to suffer from weaknesses in terms of macroeconomic imbalances, poor access to financing, rigid labour markets and an innovation deficit.
“Persisting divides in competitiveness across regions and within regions, particularly in Europe, are at the origin of the turbulence we are experiencing today, and this is jeopardising our future prosperity.” said Schwab.
“We urge governments to act decisively by adopting long-term measures to enhance competitiveness and return the world to a sustainable growth path,” he said.
Emerging economies
Along with Singapore, several Asian economies are performing strongly, with Hong Kong SAR (9th), Japan (10th), Taiwan, China (13th) and the Republic of Korea (19th) all in the top 20.
The large emerging market economies (BRICS) display different performances. Despite a slight decline in the rankings of three places, China (29th) continues to lead the group. Of the others, only Brazil (48th) moves up this year, with South Africa (52nd), India (59th) and Russia (67th) experiencing small declines in rankings.
Xavier Sala-i-Martin, Professor of Economics, Columbia University, said, “The Global Competitiveness Index provides a window on the long-term trends that are shaping the competitiveness of the world’s economies.”
“In this light, we believe it offers useful insight into the key areas where countries must act if they are to optimise the productivity that will determine their economic future,” he stressed.
US decline
Despite growing its overall competitiveness score, the US continues its decline for the fourth year in a row, falling two more places to seventh position. In addition to the burgeoning macroeconomic vulnerabilities, some aspects of the country’s institutional environment continue to raise concern among business leaders, particularly the low public trust in politicians and a perceived lack of government efficiency.
The reports points out that the US still remains a global innovation powerhouse and its markets work efficiently.
Middle East
In the Middle East and North Africa, Qatar (11th) leads the region while Saudi Arabia remains among the top 20 (18th). The United Arab Emirates (24th) improves its performance while Kuwait (37th) slightly declines. Morocco (70th) and Jordan (63rd) improve slightly.
Africa
In sub-Saharan Africa, South Africa (52nd) and Mauritius (54th) feature in the top half of the rankings. However, most countries in the region continue to require efforts across the board to improve their competitiveness.
Latin America
In Latin America, Chile (33rd) retains the lead and a number of countries see their competitiveness improve, such as Panama (40th), Brazil (48th), Mexico (53rd) and Peru (61st). Read more highlights of the report.
The Global Competitiveness Report’s defines competitiveness as the set of institutions, policies and factors that determine the level of productivity of a country. Scores are calculated by drawing together public and private data around 12 key categories – the pillars of competitiveness – that together make up a comprehensive picture of a country’s competitiveness.
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