Ten
years on from the global financial crisis, the global economy remains locked in
a cycle of low or flat productivity growth despite the injection of more than
$10 trillion by central banks. While these unprecedented measures were
successful in averting a deeper recession, they are not enough on their own to
catalyse the allocation of resources towards productivity-enhancing investments
in the private and public sectors. The Global Competitiveness Report 2019,
published today, points to the path forward.
Launched in 1979, the report provides an annual assessment of the drivers of
productivity and long-term economic growth. The assessment is based on the
Global Competitiveness Index (GCI), which maps the competitiveness landscape of
141 economies through 103 indicators organized into 12 pillars. These pillars
are: Institutions, Infrastructure; ICT adoption; Macroeconomic stability;
Health; Skills; Product market; Labour market; Financial system; Market size;
Business dynamism; and Innovation capability. For each indicator, the index
uses a scale from 0 to 100 and the final score shows how close an economy is to
the ideal state or “frontier” of competitiveness.
This year, the report finds that, as monetary policies begin to run out of
steam, it is crucial for economies to boost research and development, enhance
the skills base of the current and future workforce, develop new infrastructure
and integrate new technologies, among other measures.
With a score of 84.8 (+1.3), Singapore is the world’s most competitive economy
in 2019. The United States remains the most competitive large economy in the
world, coming in at second place. Hong Kong SAR (3rd), Netherlands (4th) and
Switzerland (5th) round up the top five. The average across the 141 economies
covered is 61 points, almost 40 points to the frontier. This global
competitiveness gap is of even more concern as the global economy faces the
prospect of a downturn. The changing geopolitical context and rising trade
tensions are fuelling uncertainty and could precipitate a slowdown. However,
some of this year’s better performers in the GCI appear to be benefiting from
the trade feud through trade diversion, including Singapore (1st) and Viet Nam
(67th), the most improved country in this year’s index.
“The Global Competitiveness Index 4.0 provides a compass for thriving in the
new economy where innovation becomes the key factor of competitiveness. The
report shows that those countries which integrate into their economic policies
an emphasis on infrastructure, skills, research and development and support
those left behind are more successful compared to those that focus only on
traditional factors of growth.” said Klaus Schwab, Founder and Executive
Chairman of the World Economic Forum.
The report documents emerging areas of promising policies, reforms and incentives to build more sustainable and inclusive economies. To manage the transition to a greener economy, the report recommends four key areas of action: engage in openness and international collaboration, update carbon taxes and subsidies, create incentives for R&D, and implement green public procurement. To foster shared prosperity, the report recommends four additional areas of action: increase equality of opportunity, foster fair competition, update tax systems and their composition as well as social protection measures, and foster competitiveness-enhancing investments.
