most competitive economies
Since 1979, the World Economic Forum has been taking the temperature of long-term economic growth and productivity in its Global Competitiveness Report. The 2019 edition covers 141 economies, accounting for 99% of the world’s GDP – and finds that, a decade on from the global financial crisis, most economies are still stuck in a cycle of low productivity growth.
But those economies that bring everyone along together, investing in re-skilling the workforce and boosting infrastructure, will be best able to withstand a global slowdown. As the Forum’s Founder and Executive Chairman Klaus Schwab says:
“Those countries that integrate into their economic policies an emphasis on infrastructure, skills, research and development, and support those left behind, are more successful compared to those which focus only on traditional factors of growth.”
Which are the most competitive economies in the world?
1. Singapore – top competitive economy
Singapore tops the rankings this year, with 84.8 out of 100. It has improved in all but two pillars since last year. As the above chart shows, it comes first for infrastructure, health and its labor market, and second for institutions, financial system and product market. But it scores 124th on the Freedom of Press Index and, as the report notes, “in order to become a global innovation hub, Singapore will need to promote entrepreneurship and further improve its skills base”.
The US remains the most competitive large economy in the world, coming in at second place. It’s an innovation powerhouse, topping the rankings for business dynamism and coming second for innovation capability. But within the product market pillar, domestic competition has dropped six points since 2018, while trade openness is more than four points lower.
3. Hong Kong, SAR
Hong Kong has climbed four places to third this year – and it ranks first on four pillars, the most of any economy. On both health and macro-economic stability, it has near-perfect scores of 100, and tops the product market and financial system rankings.
However, the report notes its “biggest weakness is undoubtedly its limited capability to innovate”, the pillar on which it comes 26th. And in the labor market pillar, it’s penalized for the lack of workers’ rights protection (coming 116th).
4. the Netherlands
Up two places from last year, the Netherlands has overtaken Germany as Europe’s most competitive economy, scoring 82.4. It scores highly for macro-economic stability, infrastructure and business dynamism, but comes 24th for ICT adoption, showing it has more to do to fully harness the opportunities afforded by the Fourth Industrial Revolution.
Switzerland drops one place to fifth this year, but performs highly in the human capital pillars of health (5th) and skills (1st). It’s the best in the world for employability of graduates and on-the-job and vocational training. It comes third for innovation capability behind Germany and the US – but it ranks last (141st) for the complexity of its tariff regime.
Japan ranks third in the East Asia and Pacific region, and sixth overall, down one place from 2018. It scores highly for health (1st) and infrastructure (5th) and benefits from large domestic and export markets (4th for market size). Across all pillars, it performs consistently, with no score under 70, but within the skills pillar, where it comes 28th, it comes 87th for the teaching of critical thinking. It also has low female participation in the labor market, with 76 women for every 100 men.
In part due to dropping one point on its overall score, Germany slips four places to rank seventh this year. In more than half (53) of the 103 indicators, it has lost points, but gained ground in 18. It’s still the world’s best innovator, but surprisingly, it falls below the OECD average for ICT adoption, with less than 1% of people subscribed to fibre-optic broadband.
Sweden is the fourth most competitive economy in Europe, and eighth overall. It has a consistently stable economy, a high rate of ICT adoption and is innovative: scoring highly within the innovation ecosystem pillars of innovation capability (5th) and business dynamism (6th).
It’s held back by the size of its domestic and export market (40th) and labor market (22nd).
The UK comes ninth this year, down one space from last year. Like most of the top 10, its biggest strength is macro-economic stability.
It has a highly educated workforce (11th for skills), but its rate of ICT adoption (31st) is low by OECD standards – and it comes 29th for digital skills among its workforce.
In 10th place again, Denmark has improved its performance this year in 10 of the 12 pillars, with its financial system and institutions recording the most progress. It also benefits from a stable economy, modern skills (3rd), a robust labor market (3rd) and widespread ICT adoption (9th). But it has reduced R&D investment and if it relaxed regulations on hiring foreign labor and wages, it could have the world’s most efficient competitive labor market.