The World Economic Forum has broadened the traditional definition of national competitiveness to emphasize the importance of social, cultural and economic factors, in addition to traditional measures of labour and capital productivity.
The World Economic Forum’s annual Global Competitiveness Report captures the changing nature of competitiveness in a world being transformed by digital technologies. Adopting new methodology in 2018 to fully capture the dynamics of the global economy in the Fourth Industrial Revolution, the latest report found that the factors that will have the greatest impact in driving competitiveness in the future were not the focus of major policy decisions in the past. Rather, they relate to idea generation, entrepreneurial cultures, openness, and agility.
The report also reveals a new global divide between countries that understand innovative transformations and those that do not. Only those economies that truly embrace the Fourth Industrial Revolution will expand and ensure significant opportunities for their communities in the future.
A number of countries – including Thailand, Brazil, the United Arab Emirates, Saudi Arabia and the Dominican Republic – have already adopted the report’s Global Competitiveness Index framework to inform the policy-making process and monitor progress. The indicators that compose the index are also widely used by other international and non-governmental organizations such as the World Bank, International Monetary Fund, Transparency International and others.
Using the new methodology – Global Competitiveness Index 4.0 – the report found one unifying theme among the world’s most competitive economies: they all possess considerable room for improvement. While the index finds that Singapore is the most “future-ready” economy, it trails behind Sweden when it comes to having a digitally skilled workforce. Switzerland, meanwhile, has the most effective policies for reskilling and retraining workers, and US companies are the fastest when it comes to embracing change.
One of the report’s most concerning findings is the relative weakness across the board when it comes to mastering the innovation process, from idea generation to product commercialization. In fact, 103 countries score lower than 50 in this area of the index. The report notably finds that attitudes towards entrepreneurial risk is the most positive in Israel and tends to be negative in several East Asian economies. Canada has the most diverse workforce and Denmark’s corporate culture is the least hierarchical, both critical factors when driving innovation.
The key takeaway is that embracing the Fourth Industrial Revolution has become a an imperative for enhanced competitiveness.
Another takeaway is that competitiveness is only one dimension of prosperity. The report shows that more competitiveness is typically associated with better social performance, with one notable exception: equality. The world’s most competitive economy, the US, is the most unequal among advanced economies. More comprehensive social policies would help tackle this growing problem.
The Global Competitive Index measures national performance according to 114 indicators that influence a nation’s productivity. The latest edition covered 140 economies, covering 98.3% of the world’s GDP.
The report is a key performance indicator for Saudi Arabia’s Vision 2030
Building on decades of experience in benchmarking competitiveness, the World Economic Forum’s Global Competitiveness Index 4.0 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. These factors are organized in twelve pillars: institutions, infrastructure, technological readiness, macroeconomic context, health, education and skills, product market, labour market, financial system, market size, business dynamism, and innovation.
Assessing these factors, and providing global benchmarks helps communities, governments and businesses to design and implement strategies for prosperity and growth.
Public-private partnerships for innovation
The Fourth Industrial Revolution is raising the bar of what countries need in order to stay competitive and build inclusive, sustainable economies. In light of the large innovation gaps between and within countries, the Forum is now launching a global network of national public-private partnerships that bring together relevant ministers and leading CEOs.
These leaders will work on specific leverage points that can improve innovation ecosystems and lead them towards new techno-economic paradigms that will make their country more competitive, inclusive and sustainable. These national initiatives will be part of the Global Network of Closing the Innovation Gaps Accelerators, a community of learning and exchange, which includes leading experts and practitioners as well as champion countries and businesses exploring new pathways to inclusive innovation.
The Global Competitiveness Report and the Closing the Innovation Gap Accelerators are part of the Forum’s Centre for the New Economy and Society, the global platform for shaping the future of inclusive economies and societies. It is committed to building prosperous, inclusive and equitable economies and societies that create opportunity for all.
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The Global Competitive Index measures national performance according to indicators that influence productivity.