Special edition of the World Economic Forum’s Global Competitiveness Report examines how the recovery from COVID-19 crisis can build productive, sustainable and inclusive economic systems.
The World Economic Forum’s Global Competitiveness Report Special Edition 2020: How Countries are Performing on the Road to Recovery captures the changing nature of competitiveness in a world being transformed by the onset of the COVID-19 crisis and the deep economic recession it has triggered.
The latest report found that countries with advanced digital economies, strong social safety nets and robust healthcare systems have managed the impact of the pandemic more effectively.
This year’s edition outlines priorities for recovery and revival and also assesses the features that helped countries be more effective in managing the pandemic.
Country rankings have been suspended due to the extraordinary COVID-19 response measures by governments, but there is an analysis of which countries are best poised for an economic transformation towards systems that combine “productivity”, “people” and “planet” targets.
What's the challenge?
The COVID-19 pandemic has triggered one of the deepest systemic economic shocks of the past 150 years. Economic activity plummeted in the first and second quarters of 2020 as the virus spread globally, causing wide-scale business closures and layoffs, only partially offset by generous rescue packages provided by governments.
The global economy fragmented as global trade and the movement of people across borders were heavily restricted. Financial markets have been hit with the deepest turmoil since the Great Depression, requiring monetary interventions on a scale that has dwarfed those in the 2008-2009 financial crisis.
“The health crisis and economic downturn have forced a fundamental rethink of growth and its relationship to outcomes for people and planet. Policy-makers have a remarkable opportunity to seize this moment and shape new economic systems that are highly productive while growing shared prosperity and environmental sustainability.”
-- Saadia Zahidi, Managing Director, World Economic Forum
Building on decades of experience in studying and benchmarking competitiveness, the World Economic Forum’s Global Competitiveness report assesses the set of factors that determine an economy’s level of productivity – widely considered as the single most important driver of long-term growth.
Our 2020 report uses our tried and tested methodology and considers pathways for revival and transformation in four areas: the enabling environment, human capital, markets, and innovation.
• Transforming the enabling environment: The report recommends that governments prioritize improving public service delivery, plan for managing public debt and expand digitization. In the longer term, more progressive taxation, and upgrading utilities and building greener infrastructure are recommended.
• Transforming human capital: The report advocates a gradual transition from furlough schemes to a combination of proactive investments in new labour market opportunities, a scaling-up of reskilling and upskilling programmes, and safety nets to help drive the recovery. In the longer term, leaders should work to update education curricula, reform labour laws and improve the use of new talent-management technologies.
• Transforming markets: While financial systems have become significantly more stable since the last financial crisis, they need to be more inclusive, and growing market concentration and raising barriers to the movement of goods and people risk hampering the transformation of markets. The report recommends introducing financial incentives for companies to engage in sustainable and inclusive investments, while updating competition and anti-trust frameworks.
• Transforming the innovation ecosystem: Although entrepreneurial culture has flourished in the past decade, the creation of new firms, breakthrough technologies and products and services that deploy these technologies has stalled. The report recommends that countries expand public investment in R&D while encouraging it in the private sector. In the longer term, countries should support the creation of “markets of tomorrow” and motivate firms to embrace diversity to enhance creativity and market relevance.
The concepts of economic transformation are relatively new and data is limited. Data from 37 countries was mapped against the 11 priorities outlined in the report and found that while no country is fully prepared for recovery and economic transformation, some are better placed than others. The report estimates that a 10% increase in readiness scores could lead to a $300 billion increase in the GDP figures of these 37 countries combined. However, these priorities for transformation should be considered for their multiple effects on growth, inclusion and sustainability.