For the first time this year the report also ranks countries’ digital competitiveness
Lausanne, Switzerland: While the world’s most competitive countries continue to jostle for the top positions in the 2017 IMD World Competitiveness Yearbook, China improved by seven places to rank 18th, the USA got pushed out of the top three and India went down 4 places from 41 to 45. In the 2014 IMD report- coinciding with the formation of the BJP-led NDA Government – India had ranked 44.
Hong Kong has consolidated its dominance of the annual rankings compiled by the IMD World Competitiveness Center, taking the top spot for the second year. Switzerland and Singapore came in second and third, with the USA ranking fourth, its lowest position in five years and down from third last year. The Netherlands completed the top five, jumping up from eighth last year.
The UAE advanced 5 positions from last year, and is now among the top 10. The UAE ranked 1st in Quality of Government Decisions, Adaptability in Government Policy, and Supporting Technological Advancement. The UAE ranked 2nd in Business Efficiency & 5th in Economic Performance.
The IMD World Competitiveness Center, a research group at IMD business school in Switzerland, has published the rankings every year since 1989. It compiles them using 260 indicators, about two thirds of which come from ‘hard’ data such as national employment and trade statistics; and a third from more than 6,250 responses to an Executive Opinion Survey that measures the business perception of issues such as corruption, environmental concerns and quality of life. This year 63 countries are ranked with Cyprus and Saudi Arabia making their first appearance.
Professor Arturo Bris, Director of the IMD World Competitiveness Center, said the indicators that stood out among the most improved countries are related to government and business efficiency as well as productivity.
“These countries have maintained a business-friendly environment that encourages openness and productivity,” he said. “If you look at China, its improvement of seven places to 18th can be traced to its dedication to international trade. This continues to drive the economy and the improvement in government and business efficiency.”
The bottom of the table, meanwhile, is largely occupied by countries experiencing political and economic upheaval. “You would expect to see countries such as Ukraine (60), Brazil (61) and Venezuela (63) here because you read about their political issues in the news. These issues are at the root of poor government efficiency which diminishes their place in the rankings,” said Bris.
Click here for 2017 IMD World Competitiveness Rankings
Digital Competitiveness Ranking
For the first time this year, the IMD World Competitiveness Center is publishing a separate report ranking countries’ digital competitiveness. Indicators for technology and scientific infrastructure are already included in the overall rankings. The new Digital Competitiveness Ranking, however, introduces several new criteria to measure countries’ ability to adopt and explore digital technologies leading to transformation in government practices, business models and society in general.
At the top of the ranking is Singapore, followed by Sweden, the USA, Finland and Denmark. “There is no doubt that supportive and inclusive government institutions help technological innovation,” said Bris.
“Singapore and Sweden have developed regulation that takes advantage of the talent they have by adopting, for instance, regulation that facilitates the inflow of overseas talent which complements the locally available pool. The US invests more in developing its scientific concentration and generating ideas but the country has a history of government support for technological innovation. This shows that in digitally competitive countries, the government must facilitate the adoption of new technologies.”
Many of the top 10 digitally competitive countries are also found at the top of the overall rankings, with some exceptions. Luxembourg, number eight in the overall list, ranks only 20th in the digital list. Finland is 15th in the overall list, but 4th in the digital ranking. “Of paramount importance in the digital ranking are issues related to how adaptive and agile economies are when faced with technological change,” Bris said.
The bottom five are Indonesia, Ukraine, Mongolia, Peru and Venezuela. Bris said: “One thing the results highlight is that these countries not only have low rankings in terms of talent but they don’t invest in developing whatever talent they have.”
“There is a relation between the lack of talent and training with a lack of business agility,” he added. “Education and knowledge production are the key.”
Click here for Digital Competitiveness Ranking
Highlights of the 2014 ranking
The US retained the No. 1 spot in 2014, reflecting the resilience of its economy, better employment numbers, and its dominance in technology and infrastructure.
There was no big changes among the top ten. Small economies such as Switzerland (2), Singapore (3) and Hong Kong (4) continued to prosper thanks to exports, business efficiency and innovation.
Europe fared better than the previous year, thanks to its gradual economic recovery. Denmark (9) enters the top ten, joining Switzerland, Sweden (5), Germany (6) and Norway (10). Among Europe’s peripheral economies, Ireland (15), Spain (39) and Portugal (43) all rise, while Italy (46) and Greece (57) fall.
Japan (21) continued to climb in the rankings, helped by a weaker currency that has improved its competitiveness abroad. Elsewhere in Asia, both Malaysia (12) and Indonesia (37) make gains, while Thailand (29) falls amid political uncertainty.
Most big emerging markets went down in the rankings as economic growth and foreign investment slow and infrastructure remains inadequate. China (23) fell, partly owing to concerns about its business environment, while India (44) and Brazil (54) suffered from inefficient labor markets and ineffective business management. Turkey (40), Mexico (41), the Philippines (42) and Peru (50) also fell.