The health of the global economy is at risk, despite years of bold monetary policy, as countries struggle to implement structural reforms necessary to help economies grow, according to the Global Competitiveness Report 2014-2015 released today by the World Economic Forum.
According to the report’s Global Competitiveness Index (GCI), the United States improves its competitiveness position for the second consecutive year, climbing two places to third on the back of gains to its institutional framework and innovation scores.
Elsewhere in the top five, Switzerland tops the ranking for the sixth consecutive year, Singapore remains second and Finland (4th) and Germany (5th) both drop one place. They are followed by Japan (6th), which climbs three places and Hong Kong SAR (7th), which remains stable.
Europe’s open, service-based economies follow, with the Netherlands (8th) also stable and the United Kingdom (9th) going up one place. Sweden (10th) rounds up the top-10 of the most competitive economies in the world.
The leading economies in the index all possess a track record in developing, accessing and utilising available talent, as well as in making investments that boost innovation.
These smart and targeted investments have been possible thanks to a coordinated approach based on strong collaboration between the public and private sectors.
Philippines is most improved ASEAN country
In Asia, the competitiveness landscape remains starkly contrasted. The competitiveness dynamics in South-East Asia are remarkable.
Behind Singapore (2nd), the region’s five largest countries (ASEAN-5) – Malaysia (20th), Thailand (31st), Indonesia (34th), the Philippines (52th) and Vietnam (68th) – all progress in the rankings.
Indeed, the Philippines is the most improved country overall since 2010. By comparison, South Asian nations lag behind, with only India featuring in the top half of the rankings.
In Europe, several countries that were severely hit by the economic crisis, such as Spain (35th), Portugal (36th) and Greece (81st), have made significant strides to improve the functioning of their markets and the allocation of productive resources.
At the same time, some countries that continue to face major competitiveness challenges, such as France (23rd) and Italy (49th), appear not to have fully engaged in this process. While the divide between a highly competitive North and a lagging South and East persists, a new outlook on the European competitiveness divide between countries implementing reforms and those that are not can now also be observed.