World’s most competitive economies have room for improvement
The United States is at the very top of the competitiveness league with a score of 85.6 out of 100, performing well in the categories of Business Dynamism, Financial System and the Labor Market. The World Economic Forum makes the point that one unifying theme of this year’s research is that the globe’s most competitive economies all have room for improvement.
Despite coming first, the U.S. is no exception and it has a lot of work to do in the categories of Institutions, ICT Adoption, and Product Market. With a score of 85.6, Singapore had the second-best overall performance, ahead of Germany (82.8) and Switzerland (82.6).
The U.S. is the Most Competitive Country in the World
The new tool maps the competitiveness landscape of 140 economies through 98 indicators organized into 12 pillars. For each indicator, using a scale from 0 to 100, it indicates how close an economy is to the ideal state or “frontier” of competitiveness. When combining these factors, the United States achieves the best overall performance with a score of 85.6, ahead of Singapore and Germany. The average score for the world is 60, 40 points away from the frontier.
Have a look at the 12 pillars of competitiveness. Global competitiveness report by world economic forum:
One unifying theme among the world’s most competitive economies is that they all possess considerable room for improvement. For example, while the report’s Global Competitiveness Index finds that Singapore is the most ‘future-ready’ economy, it trails Sweden when it comes to having a digitally skilled workforce.
Switzerland, meanwhile, has the most effective labor for reskilling and retraining policies and US companies are the fastest when it comes to embracing change.
One of the report’s most concerning findings is the relative weakness across the board when it comes to mastering the innovation process, from idea generation to product commercialization. Here, 103 countries score lower than 50 in this area of the index which is topped by Germany, followed by the United States and Switzerland.
The report notably finds that attitude towards entrepreneurial risk is the most positive in Israel and tends to be negative in several East Asian economies. Canada has the most diverse workforce and Denmark’s corporate culture is the least hierarchical, both critical factors for driving innovation.
China: State firms and private players inhabit alternate worlds
Competition in China is unusual in that, depending on where you look, the country has either too little or too much. The former is obvious, and more commonly discussed. There are broad swathes of the economy, especially those deemed strategic by the government, that are dominated by state firms.
When choosing a bank, an airline or a mobile provider, consumers have little choice but to pick a state-owned enterprise. In some of these sectors, there may be many state firms: China, for example, has 4,000-odd banks. But because they answer to the same ultimate boss — the government — and are strictly regulated, they differ little.
This lack of competition causes a series of problems. Consumers get a raw deal. State firms rarely gouge on prices, but without much motivation to make profits, their service standards are notoriously poor. As a general rule, customers can expect long waits and surly staff. More serious is the economic impact.
Banks prefer to lend to state firms because they know that in the event of trouble the government is likely to bail them out. But the return on assets earned by state firms is a third that of their private peers. China, in other words, allocates capital poorly: too many loans go to the wrong companies.
Business is Becoming More Competitive
Recent analysis indicates that the business landscape is becoming more competitive. How will companies be able to stand out in the face of this heightened competition? By refining their products, services, tactics, and organizational structures, they can maintain their momentum or carve out space.
But it won’t work if marketers are unable to express that unique value, not only in clear and compelling ways but in highly dynamic, data-driven, real time. Nimble, technologically-enhanced strategies will allow businesses to identify customer pain points and explain their solutions through personalized messaging.
Singapore leapfrogs Hong Kong and the US to become the world’s most competitive economy
- Advanced tech infrastructure, skilled workers, favorable immigration laws and other factors propel the city to No 1 spot on IMD Business School’s annual rankings
- The US falls two spots to third place as confidence boost from tax cuts fades and hi-tech exports weaken, while Hong Kong remains second
Singapore leapfrogged Hong Kong and the US to take the top spot among the world’s most competitive economies for the first time in nine years.
The city state’s advanced technological infrastructure, availability of skilled workers, favorable immigration laws, and efficiency for starting businesses supported its rise to the No 1 spot, the Switzerland-based IMD Business School said in its annual rankings.
The US fell two spots to third place as the confidence boost from tax cuts faded and high-technology exports weakened.
Asia-Pacific economies performed particularly well, with 11 of 14 in the region either improving or maintaining their rankings. Hong Kong, in second place, was credited with a “benign tax and business policy environment” and access to business finance.