The financial crisis has profoundly changed the economic landscape and shown, more than ever, the need for both advanced and developing economies to work together more closely to tackle global problems.

The G20 Leaders’ Summit, which convenes in St Petersburg today, will address the world’s economic challenges. This year, the focus will shift away from dealing with unstable financial markets, fiscal crises and even a possible break-up of the euro, and towards collective efforts to rebuild confidence and boost growth, reducing unemployment and improving the quality of jobs to create better opportunities for all.

As such, this Summit is a golden opportunity to perform two urgent tasks: bring the global economic agenda’s focus back to adopting policies and measures that can have tangible impacts on people’s every-day lives; and reconnect policy-making with people.

With advanced economies, especially in Europe, continuing to depict weak economic prospects and the larger emerging economies showing signs of economic deceleration after several years of strong growth, the G20 leaders will not be short of agenda items. However, as The Global Competitiveness Report 2013-2014, launched yesterday, highlights, the global economy will find itself on a more solid footing only by adopting long overdue reforms and investments to boost productivity levels and raise competitiveness.

Explore our competitiveness tracker.

There is no one medicine to address all these concerns. Several advanced economies such as Spain or Italy continue to suffer from significant competitiveness challenges, while in the emerging economies, especially the BRICS, competitiveness levels have stagnated.

But while the drivers of competitiveness differ from country to country, The Global Competitiveness Report 2013-2014 also finds common factors holding back competitiveness in many of these countries. The lack of a strong and efficient institutional set-up, along with bureaucratic institutions and high levels of corruption, ranks high on the list.

Moreover, inefficiencies in the functioning of markets due to insufficient levels of competition affect the productive allocation of resources. Rigidities in labour markets hamper countries’ ability to get the best out of their workforce.

Innovation is possibly the most important factor. The lack of capacity to translate ideas into high-value products or services is a concern that increasingly affects advanced and emerging economies. As the innovation landscape becomes increasingly “flat”, raising the innovation potential of companies by supporting the generation of new ideas and an enabling business environment is crucial to unlocking productivity, contributing to the rise of global knowledge spillovers, and providing more and better opportunities for all.

Setting these problems right will require strengthening the function of the global financial market, reigniting enhanced competition in the goods markets through increased trade, boosting entrepreneurship measures and clamping down on market-dominant positions. It also means improving the functioning of institutions and creating the right environment to boost innovation through investments in education, skills, research and technology.

It will not be easy to adopt these reforms will not be it should be at the top of the long-term agenda of the G20. It will require commitment and determination, and political leaders will have to rebalance key elements of their countries’ social and economic systems, while winning public support for change. Cooperative leadership among business, government and civil society, both nationally and globally, must set shared objectives around a global competitiveness agenda. If the G20 gets this right, we can look forward to new and enhanced opportunities for all.
Competitiveness at a glance: See how well different countries perform on our latest Global Competitiveness Index.  

Author: Beñat Bilbao-Osorio is a Senior Economist with the World Economic Forum’s Global Competitiveness and Benchmarking Network

Image: G20 summit banners are seen in central St. Petersburg REUTERS/Alexander Demianchuk.