The top 10 most competitive economies in the world

Competitive business
By Eleanor O'Neill, CA Today

6 October 2016

Switzerland's economy has beaten Singapore and the US for top billing in the annual World Economic Forum (WEF) Global Competitiveness Report.

The study ranks global economies based on the Global Competitiveness Index (GCI) and is an annual assessment of the factors driving productivity and prosperity in 138 countries.

The report offers insight into how priorities may be shifting for some nations. Data in the GCI suggests that a nation’s performance in terms of technological readiness, business sophistication and innovation is growing in importance for driving competitiveness and growth.

The GCI score of an economy is calculated using 12 factors, including four core requirements (in bold):

  • Institutions
  • Infrastructure
  • Macroeconomic environment
  • Health and primary education
  • Higher education and training
  • Goods market efficiency
  • Labour market efficiency
  • Financial market development
  • Technological readiness
  • Market size
  • Business sophistication
  • Innovation

This is the eighth consecutive year that Switzerland has claimed the top spot and European countries continue to dominate the top 10. For these economies, maintaining and improving prosperity levels will depend heavily on their ability to harness innovation and the talents of their workforces.

The UK climbed three places this year to finish seventh with a score based on pre-Brexit data.

The World Economic Forum Global Competitiveness Report 2016/17

10. Finland

Helsinki, Finland

Finland has been hit hard by the global economic downturn, dropping two places this year. The fall of exports to Russia and the drop in demand for paper and electronic exports have had a continuing negative impact.

Top factor: Health and primary education.

Most problematic: Restrictive labour regulations.

9. Hong Kong

Hong Kong Island, UK

Hong Kong has a strong consistent performance, appearing in the top 10 for the fifth year running. Its domestic market is highly competitive, efficient and one of the most open in the world.

Top factor: Infrastructure.

Most problematic: Insufficient capacity to innovate.

8. Japan

Tokyo, Japan

Japan loses three places this year due to a poor macroeconomic situation, caused by a large budget deficit. However, the country's firms are highly sophisticated, typically employing unique products and production processes with significant control over international distribution.

Top factor: Health and primary education.

Most problematic: Tax rates.

7. United Kingdom

London, UK

The United Kingdom moved up three places on the back of marginal score improvements this year, though initial repercussions from the Brexit vote have not been captured by the data. UK business processes are supported by a high level of digital readiness by both businesses and consumers.

Top factor: Health and primary education.

Most problematic: Tax regulations.

6. Sweden

Stockholm, Sweden

Sweden moves up three places to sixth with improvements in the basic factors of competitiveness, especially the macroeconomic environment. The country is well equipped to embrace the 'Fourth Industrial Revolution', with a high level of technological readiness innovation.

Top factor: Technological readiness.

Most problematic: Tax rates.

5. Germany

Berlin, Germany

Germany moves down a rank this year, despite an improvement to its overall score. It continues to push the innovation frontier, placing highly in technological readiness, innovation, business sophistication and efficiently using its talent.

Top factor: Health and primary education.

Most problematic: Tax regulations.

4. Netherlands

Amsterdam, The Netherlands

The Netherlands stepped up again in this year's report and moved one place to fourth. Success stories of social innovation are particularly frequent in the Netherlands and the country scores especially high on the quality of its scientific research institutions.

Top factor: Health and primary education.

Most problematic: Restrictive labour regulations.

3. United States

Washington DC, USA

The United States remains stable overall in third as the result of a declining budget deficit. The position of the US is primarily driven by its market size, financial market development and labour market efficiency. It is not within the top 10 of any of the core GCI factors.

Top factor: Market size.

Most problematic: Tax rates.

2. Singapore

Marine Bay, Singapore

Singapore ranks second for the sixth year in a row thanks to a remarkably strong performance in higher education and training and goods market efficiency. Public institutions are transparent and highly efficient and the government budget has been in surplus since 2010.

Top factor: Health and primary education.

Most problematic: Restrictive labour regulations.

1. Switzerland

Bern, Switzerland

Switzerland tops the GCI for the eighth consecutive year, achieving an even higher score than in previous years. Switzerland arguably possesses one of the world’s most fertile innovation ecosystems, combining a very conducive policy environment and infrastructure, with academic excellence and an unmatched capacity to attract the best talent and large multinationals.

Top factor: Technological readiness.

Most problematic: Tax regulations.

Source: World Economic Forum


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