Singapore is the most competitive economy for the second year in a row according to IMD’s 2020 World Competitiveness Ranking. Denmark, moving up from 8th last year, and Switzerland close the podium. The number of small economies in the top 10 is striking with only the USA (10th) and Canada (8th) as major economies making it to the top tiers of the list.
The factors behind Singapore’s success can be found in its strong economic performance which stems from robust international trade and investment, employment and labor market measures.
Other factors include stable performances in both its education system and technological infrastructure – telecommunications, internet bandwidth speed and high-tech exports –, which according to IMD, also play key roles.
A strong economy, labor market, and health and education systems are behind Denmark’s 2nd position. In addition, the country performs very well in international investment and productivity, and topped Europe in business efficiency.
Likewise, Switzerland has been gradually edging towards a podium position, from 5th to 4th and now 3rd in 2020. Robust international trade fuels its strong economic performance, whilst its scientific infrastructure and health and education systems show steadfast displays. The Netherlands and Hong Kong SAR close the top 5.
The number of small economies – broadly defined as such by their GDP – in the top ten is striking. Singapore, Hong Kong and the UAE remain as top competitive economies while big powerhouses like China (20th), Germany (17th) or the United Kingdom (19th) can only make it to the top 20.
It is worth noting that while Hong Kong SAR came in at 5th, this is a far cry from 2nd which it enjoyed last year. The decline can be attributed to a decline in its economic performance, social turmoil in Hong Kong as well as the rub-on effect of the Chinese economy. However, the 2020 rankings do not pick up on events from the last couple of months.
Arturo Bris, Director of the IMD World Competitiveness Center and Professor of Finance, says, “The benefit of small economies in the current crisis comes from their ability to fight a pandemic and from their economic competitiveness. In part these may be fed by the fact it is easy to find social consensus.”
Likewise, IMD pointed out in a press release that: “This year’s results show a common pattern in the factors that have influenced the current performance of highly ranked countries. Such a pattern emerges around international trade and investment, employment, the openness of societies, measures related to political stability, and to social and gender equality. Not all economies approach problems in the same way, and this impacts their resilience and agility in the face of changing and difficult circumstances.”
Geopolitical instability and conflict have damaged the most powerful economies in the world. For the second year in a row, the USA failed to fight back having been toppled from its number one spot last year by Singapore, and coming in at 10th (3rd in 2019). Trade wars have damaged both China and the USA’s economies, reversing their positive growth trajectories. China this year dropped to 20th position from 14th last year.
The UAE also falls from 5th to 9th. The Middle East struggled as a region, reflecting the oil crisis.
Norway made this year’s top ten, at 7th, having been 11th last year. This is partly due to a wider pattern in the region: all the Nordic economies experienced a noteworthy improvement in business efficiency. In fact, they all made the top ten in this measure.
The UK climbed from 23rd to 19th, whilst neighbour France (32nd) slightly lost its 2019 foothold on 31st. One interpretation is that Brexit may have created the sentiment of a business-friendly environment in the making. The UK ranked 20th on the business efficiency measure, compared to 31st least year.
Canada moved up to 8th from 13th. This rise is centered around improvements in measures related to its labor market and in the openness of its society. It led the North American sub-region.
In Latin America, a distrust of institutions may be reflected by minimal changes. Chile (38th) remains the highest-ranked country in the sub-region and Venezuela the lowest.
IMD’s World Competitiveness Ranking, now in their 32nd year, measures how competitive an economy is according to different criteria like international trade, employment, social and gender equality, etc. And there is a new factor in this year’s edition: achieving the UN Sustainable Development Goals.
In fact, this criteria were added to reflect the importance of achieving the UN Sustainable Development Goals. The criteria provide a perception of where the economy stands with respect to different sustainable goals that need to be satisfied in 10 years, such as education and the environment, inclusion and empowerment, ageing and health. Indeed, an important component of the competitiveness study is to align the criteria employed with the important challenges and concerns of the world economy.
Competitiveness provides the framework to quantify the outcome of dealing with these challenges from a country perspective. Ultimately, it allows IMD to recognize the factors that facilitate prosperity. And the organization went on saying that this is how they expect their rankings to be used and interpreted: competitiveness is both a tool and an objective of economic policy.
“There is no single nation in the world that has succeeded in a sustainable way without preserving the prosperity of its people. Competitiveness refers to such an objective: It determines how countries, regions and companies manage their competencies to achieve long-term growth, generate jobs and increase welfare. Competitiveness is therefore a way towards progress that does not result in winners and losers ̶ when two countries compete, both are better off,” concluded Arturo Bris.
Hernaldo Turrillo is a writer and author specialised in innovation, AI, DLT, SMEs, trading, investing and new trends in technology and business. He has been working for ztudium group since 2017. He is the editor of openbusinesscouncil.org, tradersdna.com, hedgethink.com, and writes regularly for intelligenthq.com, socialmediacouncil.eu. Hernaldo was born in Spain and finally settled in London, United Kingdom, after a few years of personal growth. Hernaldo finished his Journalism bachelor degree in the University of Seville, Spain, and began working as reporter in the newspaper, Europa Sur, writing about Politics and Society. He also worked as community manager and marketing advisor in Los Barrios, Spain. Innovation, technology, politics and economy are his main interests, with special focus on new trends and ethical projects. He enjoys finding himself getting lost in words, explaining what he understands from the world and helping others. Besides a journalist, he is also a thinker and proactive in digital transformation strategies. Knowledge and ideas have no limits.