The consumer-oriented capitalist economy is based on healthy competition between all concerning parties, not just among consumers but also between rivals occupying the same market. The World Economic Forum (WEF) has been responsible for quantifying the economic competitiveness of individual countries across the globe. The nature of economic competitiveness has transformed over the years due to the advent of new digital technologies, forcing the WEF to change its methodology and introduce the Global Competitiveness Index 4.0. Based on the modified index, the WEF has published its 2018 report that ranks 140 countries according to their economic competitiveness.
The United States has topped the list for the first time since 2007, ending Switzerland’s nine-year hold on the top spot that lasted from 2008 to 2017. The Global Competitiveness Index 4.0 utilizes 98 detailed indicators, under 12 specific drivers of productivity spread across four main sections: the enabling environment around businesses, human capital, markets, and the innovation ecosystem. Out of a possible 100 points, representing an imaginary “ideal frontier of economic competitiveness”, the United States managed to score a mammoth 85.6. According to WEF, the U.S. holds a strong “business dynamism” pillar as a result of its vibrant entrepreneurial culture, a strong labor market, and financial system.
Amassing 83.5 points, Singapore has ranked in at second and has been described as the most ‘future-ready” economy in the world. The next two spots are occupied by two European nations – Germany (82.8) and Switzerland (82.6). Europe’s largest economy, Germany, has a strong ability to mater business innovation processes – resulting in macroeconomic stability, worker skills, business dynamism, and overall innovation capability. On the other hand, Switzerland’s ability to reskill and retrain its workforce has seen them so high up in the index based rankings.
Overall, the results have indicated that East Asia and the Pacific regions are more competitive than Europe as a whole. This could be due to the reason that as Asian markets are opening up more to the world, European nationalism is closing their markets in the other hand. The managing director at the WEF, Saadia Zahidi, mentions that “open economies are more competitive”. The potential of Brexit has damaged Britain’s international standing, resulting it to drop two places to eighth in the global competitiveness index.
At the same time, the WEF states that the Trump administration’s recent trade policies wouldn’t have had a factor in the rankings this year. Zahidi says, “While it is too early for the data to filter through in this year’s report, we would expect trade tensions with China and other trading partners to have a negative impact on the US’ competitiveness in the future, were they to continue.”
The report also makes a number of general assessments regarding the overall competitiveness and health of the world economy. It has stated that the new wave of digital technologies creating fresh policy challenges for governments runs the risk of impacting global growth and productivity in the near future. In fact, governmental policy making hasn’t focused on many of the key factors that will drive future economic growth – especially idea generation, entrepreneurial culture, openness, and agility. Thus, while few governments have begun to plan for the impact of the fourth industrial revolution, the majority of global economies are ill-prepared for rapid advances in technology.