GCR Country Profile Highlights 2007/2008

• The United States is assessed this year as the world’s most competitive economy; endowed with a combination of sophisticated and innovative companies operating in very efficient factor markets. This is buttressed by an excellent university system and strong collaboration between the educational and business sectors in research and development.

• Switzerland remains among the best performers in the Global Competitiveness Index, at second position overall. The country is characterized by an excellent capacity for innovation and a very sophisticated business culture. Endowed with top-notch scientific research institutions and high spending on research and development as well as strong collaboration between the academic and business sectors ensures that much of its basic research is translated into useful products and processes on the market, buttressed by strong intellectual property protection.

• The Nordic countries continue to hold privileged positions in the rankings. Denmark ranks third, with Sweden and Finland following closely at fourth and sixth places, respectively. In a number of areas the Nordics outperform the United States and Switzerland such as the best marks worldwide for their macroeconomic environments.

• Russia ranks 58th this year. Despite the country’s large market size and improving macroeconomic management, Russia’s main weaknesses are found in its institutional environment and business standards.

• Within Latin America and the Caribbean, Chile ranks 26th, assessed as the most competitive economy in the region. Macroeconomic stability has been instrumental in freeing up resources that have been invested in areas such as upgrading infrastructure, improving the educational system. The liberalization process is also a strength resulting in a well-functioning factor markets. Chile also boasts one of the most developed and sophisticated financial markets.

• Brazil ranks 72nd. The country has made notable improvements in recent years towards sounder public finances, with reduced levels of public indebtedness. Brazil has a number of important competitive advantages, such as the large size of the domestic market, its relative prowess in absorbing and adapting technology from abroad and leveraging ICT and, especially, its degree of business sophistication and capacity to generate endogenous innovation. However, the overall debt level remains high by international standards, contributing to a low national savings rate and high interest rates.

• Within Asia and the Pacific, the highest ranked country is Singapore, at seventh place. Singapore draws its greatest competitive advantages from the efficiency of its goods, labour and financial markets where in each pillar it ranks among the top three in the world. 

• China ranks 34th. The country draws its key competitive advantage from its significant domestic and foreign market size allowing the country’s companies to benefit from significant economies of scale. Macroeconomic stability is another source of strength, with manageable government debt, high national savings and low inflation, although the government has started to run budget deficits. China’s competitive performance reveals, however, the need to address weaknesses particularly in three areas: financial markets, higher education and training, and the quality of public and private institutions.

• India, at 48th place, also derives substantial advantage from its market size, where it ranks third in domestic market size and fourth in foreign market size; as well as gaining competitive advantage from the sophistication of its businesses and its innovative potential.
• In the Middle East and North Africa, Israel, at 17th, continues to lead the region in competitiveness. Israel’s strong showing is boosted by a large number of competitive advantages. These include its first-class educational system, which has provided the country with a large pool of high skilled labour and with top-notch research institutions.

• As in other oil-exporting countries in the region, the macroeconomic environment in Kuwait, ranked 30th, has markedly improved in the past few years. The country is presently assessed as second to none out of all countries with respect to macroeconomic stability, reflecting a large budget surplus, low debt and growing national savings. Kuwait also boasts efficient financial infrastructure with easy access to a wide range of financial services, including loans, equity markets and venture capital.

• Within sub-Saharan Africa, South Africa, ranks 44th overall. The country receives strong marks for its property rights, corporate ethics and goods, as well as financial market efficiency, business sophistication and innovation. South Africa’s scientific research institutions are assessed on a par with Hong Kong’s, and the country has a higher rate of patenting than a number of European countries. These combined strengths explain South Africa’s position at the top of the regional ranking. However, South Africa does face a number of obstacles to competitiveness in terms of labour market flexibility and a low university enrolment rate of only 15%. Finally, lack of security remains an obstacle to doing business in South Africa.

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