Once a year the WEF publish their competitiveness league table. Whilst it doesn’t rank as a high (or even low) impact news event it’s an interesting table, particularly when you take on board the comments, which shine a critical light into the ailments certain economies may be suffering from…
The World Economic Forum was first conceived in January 1971 when a group of European business leaders met under the partronage of the European Commission and European industrial associations. German-born Klaus Schwab, then Professor of Business Policy at the University of Geneva, chaired the gathering, which took place in Davos, Switzerland.
Klaus Schwab, the Forum’s founder and executive chairman, is still the voice and focal point of the forum. As the tables were published on Wednesday he stated above all else that “innovation was increasingly the key ingredient in an economy’s ability to prosper”.
In fact there’s constant code running through the forum’s conclusions as to what makes a country competitive judged by the WEF metrics; innovation ranks high, as does a modern functional infrastructure, further education, deregulated work-forces and lack of red tape, in terms of business regulation.
When you analyze these key factors one country stands out like a sore thumb in potentially moving backwards using these metrics; the United Kingdom, whose infrastructure in particular came in for criticism early in 2013.
The UK economy would be boosted by as much as £100bn a year if the country’s transport and energy infrastructure matched standards in Europe, the Centre for Economics and Business Research stated. Substandard infrastructure cost the economy £78bn every year between 2000 and 2010, the analysts said. They estimated that improvements could be worth an additional 5% of gross domestic product or £100bn a year by 2026.
The U.K. moved down to 10th in the WEF league table, reflecting what the Forum called “the distractions of public debt problems and concerns about the future of the euro currency.”
For the fifth time in succession, Switzerland was named as the world’s most competitive economy, the single criticism being that the nation needs to improve its university enrollment in order for it to become even more innovative.
Germany took fourth position in the WEF’s annual ranking of the world’s most competitive economies, just ahead of the USA. The study moved Germany up two places compared to last year, it was praised for its innovative ability and above all its modern infrastructure.
WEF officials noted that Germany spent more than many other industrialized nations on research and development. But they also warned that for the country to move up even higher in the league table it must alter its inflexible labor market and weed out overregulation.
Singapore and Finland kept their positions at number two and three among the 148 countries analyzed by the World Economic Forum, Amongst the biggest risers this year was Indonesia which climbed 12 places to number 38. The WEF said their rapid progress was due to spending on infrastructure, a more efficient government and gains in the technology sector.
Although Canada’s global competitive ranking remains unchanged from last year, the country is languishing behind in innovation due to too little being spent on research and development. “Canada needs to focus its attention on blazing new trails that foster competitiveness and enhance its innovation and commercialization performance to create value-added growth and economic and social benefits.”
Overall, Canada remained at the 14th spot for a second year, down from the ninth position in 2009. In terms of innovation, it was ranked 25th, a drop from 21st last year and 15th in 2011.
The U.S. turnaround reflects “a perceived improvement in the country’s financial market as well as greater confidence in its public institutions,” the report concluded. The United States’ competitiveness among global economies is rising again after four years of decline, though northern European countries continue to dominate the rankings.
The Forum ranked the U.S., the world’s largest economy, in fifth place for overall competitiveness, up from seventh last year. The U.S. turnaround reflects “a perceived improvement in the country’s financial market as well as greater confidence in its public institutions,” the report concluded.
Hong Kong moved up to seventh and Japan advanced to ninth. But Sweden dropped to sixth, while the Netherlands sank to eighth.
Many Middle East countries emerged as the biggest losers. Politically troubled Egypt dropped 11 placed to 118, while Iran tumbled 16 ranks to come in at number 82 on the back of political instability and lack of financing in the sanctions-hit nation.