Global Competitiveness Report -2018: Key Highlights
The world economic forum has recently published its global competitiveness report According to the WEF, the Global Competitiveness Index assesses the competitiveness of the landscape of 137 country’s economies and it provides unique insight into the drivers of their productivity and prosperity. The 2018 report uses a new methodology to capture the dynamics of the global economy in the Fourth Industrial Revolution. The GCI this year has been reportedly called as GCI 4.0
12 Pillars Of Competitiveness
There are twelve pillars of competitiveness used rank each country’s economy. The twelve pillars are as follows: institutions, infrastructure, macroeconomic environment, health and primary education, higher education and training, goods market efficiency, labor market efficiency, financial market development, technological readiness, market size, business sophistication, and innovation.
New Concepts Has Been Used
The inclusion of four new concepts like human capital, innovation, resilience, agility in the GCI has provided more novel and nuanced insights into the economies.
New Benchmarks Have Been Used
The GCI 4.0 introduces a new progress score ranging from 0 to 100. Each country should aim to maximize its score on each indicator. This approach emphasizes that competitiveness is not a zero-sum game between countries—it is achievable for all countries
Openeness Concept Used For The First Time
The concept of openness has been introduced indicating that economies performing well in the areas that denote openness tend to perform well in terms of innovation and market efficiency. Openness has been defined as average of six indicators including non –tariff measures, tariffs, service trade restrictive index, ease of hiring foreign labours, international co-inventions, and custom clearances.
A Level Playing Field For All Economies.
The index offers each economy a level playing field to define its path to growth. The index reveals that economies need to be holistic in their approach to competitiveness rather than focusing on a particular factor alone. A strong performance in one pillar cannot make up for a weak performance in another. For instance, investing in technology without investing in digital skills will not yield meaningful productivity gains. In order to increase competitiveness, no area can be neglected.
- TOP 10 COUNTRIES: US, Singapore, Germany, Switzerland, Japan, Netherlands, Hong Kong, The United Kingdom, Sweden, Denmark
- BRICS RANKING: China (Rank 28), Russia (Rank 43), Indian (Rank 58), Southafrica (Rank 67), Brazil (Rank 72)
- Switzerland lost its first position to the United States with the ranking based on different methodology, which includes idea generation, entrepreneurial culture, openness, and agility.
- Europe and North America are, combined, home to seven of the 10 most competitive economies.
- East Asia and the Pacific region arehome to the other three top ten economies, achieves the highest median score (72.6) among all regions, ahead of Europe and North America (70.8).
- 17 of the 34 sub-Saharan African economies are among the bottom 20 globally, and the region’s median is a low 45.2.
- The Republic of Korea is the world’s champion in terms of broad-based ICT adoption, with a near perfect score of 91.3 on this pillar
- Differences on the Financial system pillar are small but the same cannot be said when it comes to the Macroeconomic stability pillar.
- There is also a physical infrastructure gap among G20 economies. There are stark contrasts in terms of innovation capabilities, too.
- Within the G20, on health, the clear leader is Japan, which ranks first with a perfect score of 100, while South Africa is 127th with a score of 43.2.
- While Germany, the US, Japan, the United Kingdom and Korea are beacons of innovation, other G20 countries are significantly lower. China’s innovation score (64.4) is more than 10 points above India’s (53.8) and Russia’s (50.7).
Implications Of Gci 4.0
- All economies must invest in broader measures of competitiveness today to sustain growth and income in the future.Countries who want sustained growth and rising income levels must invest beyond their current areas of strength
- The volatile situation of world todaywith a wide range of vulnerabilities, technological change, geopolitical tensions etc has enhanced the importance of making economy more shock resilient.
- The openness must be supported by all economies as more open economies are more innovative and their markets are more competitive. The definition of openness must look to concepts beyond trade, freedom of people’s movement and ideas exchange. In the report it can be seen that Singapore, Germany, Netherlands, Sweden, Finland and the United States are some of the most open countries in the world, while the Islamic Republic of Iran and Ethiopia are among the least open. Brazil and India also emerge as relatively “closed”.
- The agility and future readiness should be enhanced. In coming times adaptability and agility of all stakeholders—individuals, governments and businesses—will be key features in successful economies .The report show, for example, that Singapore’s government is the most ‘future-ready’ followed by Luxembourg’s and the United States. The governments of Brazil Greece and Venezuela are perceived as among the least ‘future-ready’.
- Strengthening institutions will improve competitiveness. Weak institutions as including security, property rights, social capital, checks and balances, transparency and ethics, public-sector performance and corporate governance etc continue to hinder competitiveness, development and well-being in many countries.
- Innovation has become an imperative for all advanced economies and a priority for a growing number of emerging countries. The results show that there are only a few innovation powerhouses in the world, including Germany, the United States and Switzerland. The global median score on the Innovation capability pillar is 36, by far the lowest score across the 12 pillars.
- Proactive, far-sighted leadership is required. The results suggest that achieving equality, sustainability and growth together is possible. It is possible to be both pro-growth and ‘pro-equity’. The most competitive economies have the largest ecological footprints, but they are the most efficient because their footprint per unit of GDP is the lowest. It is therefore necessary for leaders to set longer-term priorities and proactive efforts to create virtuous cycles between equality, sustainability and growth.