Despite this year's global market turmoil, many of the same countries, including the U.S., remain a top the World Economic Forum ranking
The global economy has been under threat for more than a year, and events in recent months have taken matters to a crisis stage. But judging by the World Economic Forum's annual Global Competitiveness Report, you would hardly know it. So far the financial meltdown has had little effect on the relative competitiveness of the world's most advanced countries, according to the ranking.
Of the record 134 countries surveyed this year, the majority at the top of the list remain European, while the U.S. continues to hold on to the No. 1 spot and Canada squeezes into the top 10. As in previous years, Singapore and Japan are the only Asian countries included at the top of the list, though Hong Kong comes close, at No. 11.
The results show that despite market turmoil in recent months that has brought some of the world's most powerful companies and even countries to their knees (BusinessWeek.com, 10/10/08), a range of nonmarket attributes such as education, regulation, and infrastructure still account for the advantages some nations enjoy over others.
More Than Financial Markets
The annual study from the Geneva-based World Economic Forum (WEF) assigns a score to a broad range of criteria affecting economies' business climates. It then categorizes them into 12 "pillars," including the size and efficiency of markets, innovation, infrastructure, business sophistication, and the quality of health and education. "The stability of the financial markets is one of them, but it's not the most important," says Jennifer Blanke, a senior economist at the WEF who oversees the study. "Those countries that have strengths in the other areas will bounce back quickly."
The European bloc remains strong, with six countries in the top 10. Switzerland, thanks to its high level of business sophistication and capacity for innovation, retained the second-place ranking it earned in the WEF's 2007 ranking (BusinessWeek.com, 11/6/07). The Nordic countries—Denmark at No. 3, Sweden at No. 4, and Finland at No. 6—continue to punch above their weight in this sphere as well. All share relatively healthy macroeconomic environments, run budget surpluses, carry very low levels of public indebtedness, and have some of the best functioning and most transparent institutions in the world.
Germany, however, despite its significant market size, has been dragged down two spots to seventh place this year due to its rigid labor markets. And Britain fell out of the top 10 entirely, sagging from ninth to 12th place, owing to a low national savings rate, increasing dependence on (now shaky) financial services, and eroding trust in political leadership.
Singapore Rises, Japan Slips
The two Asian nations in the top tier, Singapore and Japan, saw diverging fortunes. The strengthening of Singapore's institutional framework combined with a world-class infrastructure earned it a promotion to fifth place this year, up from seventh in 2007. Ninth-ranked Japan still holds its own as the world's second-largest economy, with commendable investment in research and development, but it fell one position vs. last year due to lingering high debt levels and mistrust of its financial institutions.
"The surprise was that the U.S. is still on top," Blanke says. The world's largest economy remains second-to-none in productivity and enjoys a flexible labor market, a very sophisticated business culture, and many of the world's best universities. Robust structural features help it to absorb economic shifts and downturns in business cycles.
But what hurt the U.S. this year was a weak macroeconomic environment. Like Japan, its debt levels are among the highest in the world. With so much money owed to creditors, the U.S. has less wealth to reinvest in its own future—and less wiggle room to address the current financial market crisis. "That's a warning sign we have been seeing for a while," Blanke says.
What About Emerging Economies?
Emerging countries with swelling economies are struggling to edge their way up the list. Burgeoning economic powerhouses such as Brazil, Russia, India, and China (the so-called BRIC countries) all rank among the top half of countries surveyed by the WEF, but their climb up the list is bogged down by a variety of factors. India, for example, boasts an impressive availability of scientists and engineers as well as top-notch research institutions. But these schools are limited to a very elite few. "At the end of the day, what we're really looking at is prosperity," Blanke says.
Of the BRIC countries, China is moving the fastest, jumping four places on this year's ranking, to No. 30. That's thanks in large part to the strides China continues to make in innovation, a surplus in its government budget, and above all the size of its domestic market. "It's huge and growing," Blanke says.
Still, these emerging markets have a way to go to before they enter the big leagues. Blanke predicts that at their current rate, it will take 10 years or more for them to challenge the top ranks of the world's most competitive economies. "They are going to do amazingly well, but they all require much more investment based on their populations," Blanke says.
Who's Winning the Race?
The financial crisis that has roiled global economies in recent months is a salient reminder of how economically interdependent the world has become. Competition among the major players has never been fiercer, which makes the Geneva-based World Economic Forum's annual ranking of the world's most competitive countries all the more important and informative.
The WEF surveyed 12,000 business leaders in 134 countries and pulled from publicly available economic data to produce its rankings and report. The result is a weighted measure of economic health indicators that shows who comes out on top—and who still has work to do.
No. 1: U.S.
Market Size: 1
Innovation: 1
Education/Training: 5
The U.S. retains its position this year as the world's most competitive country. Many robust structural features, such as business systems, formidable universities, and top-ranked innovation make the American economy remarkably powerful and productive. They also help to soften economic shocks such as routine business downturns and, with luck, the current financial crisis. However, despite having the largest economy on the planet, fiscal deficits in recent years have weakened the country's global standing and increased public indebtedness. That could limit flexibility in fiscal policy in the future and leave the U.S. more vulnerable to outside influences.
No. 2: Switzerland
Market Size: 37
Innovation: 3
Education/Training: 7
This small Alpine country has a lot more to brag about than just banks and beauty. Innovation is fueled by high spending on research and development relative to its size, as well as a strong relationship between a sophisticated business culture and world-class academic institutions. This means that research projects easily make their way out of the lab and onto production lines. Strong intellectual property protection encourages a high rate of patenting, where Switzerland ranks sixth, despite its diminutive size.
No. 3: Denmark
Market Size: 46
Innovation: 10
Education/Training: 2
Like its Nordic counterparts, Demark holds onto its rank from last year, coming in third, and shows potential for further widening its lead over them. It has overhauled its labor markets to create more flexibility for both businesses and employees. It also boasts among the best-run and most transparent financial institutions in the world. Additionally, a strong focus on education and high-quality health care keeps Denmark strong. Its taxes, however, are some of the highest in the European Union.
No. 4: Sweden
Market Size: 32
Innovation: 5
Education/Training: 3
Home to an outsize collection of world-beating companies—from Ericsson and Electrolux to home furnishing giant Ikea—Sweden keeps its position this year as the fourth most competitive country in the world. The most populous Scandinavian country enjoys strong financial institutions characterized by an ethical business climate and transparency in government policy-making. Sweden also gets high marks for education and training (ranking third globally) and exhibits a high degree of technological readiness. But high taxes and an inflexible labor market can be stifling to efficiency.
No. 5: Singapore
Market Size: 53
Innovation: 11
Education/Training: 8
The island city-state in Southeast Asia jumped to fifth place this year from seventh, largely as a result of a powerful institutional framework. The Singaporean government is the most transparent, least wasteful, and least burdensome on business of any country in the world. It also is the government most trusted by its citizens. Despite its small market size, Singapore also is buttressed by a world-class infrastructure and efficiency in all markets—goods, labor, and financial—where it ranks second globally.
No. 6: Finland
Market Size: 50
Innovation: 2
Education/Training: 1
The home of mobile phone giant Nokia, Finland continues to sustain high standards domestically, buoyed by a sophisticated business environment and a flexible workforce. The country ranks first in the availability of scientists and engineers and has the top-rated educational system in the world. Its young generation appears set to carry the country's influence into the future. Finland is also No. 1 in health and primary education.
No. 7: Germany
Market Size: 5
Innovation: 8
Education/Training: 21
With the best-ranked infrastructure of any country in the world, Germany, home to the autobahn, remains in the top 10 most competitive countries, although its position slumped to seventh place from fifth last year. Despite heavy investment in R&D and a sophisticated business culture, Germany suffers from increasingly weak universities and a rigid labor market. A lack of private wage determination, high nonwage labor costs, and the cost of terminating employees combine to throttle job creation.
No. 8: Netherlands
Market Size: 20
Innovation: 12
Education/Training: 11
The Netherlands rose two spots in the ranking this year, owing in part to its aggressiveness in adopting new technologies: The Dutch are among the most wired citizens on the planet, ranking second in Internet usage and ownership of personal computers. An efficient labor market compared with those of its neighbors and an excellent educational system also help boost its ranking.
No. 9: Japan
Market Size: 3
Innovation: 4
Education/Training: 23
The second-largest economy in the world, Japan finished in ninth place this year, down from No. 8 a year ago. Home to automobile and electronics giants like Toyota and Sony, Japan possesses a huge pool of scientists and engineers, spends vast sums on research and development, and demonstrates enormous capacity for innovation. Combined with a high level of business sophistication, these assets are what give Japan its competitive edge. But with one of the highest debt levels in the world and mistrust of public institutions and political leadership by its citizens, Japan runs the risk of falling further in the rankings.
No. 10: Canada
Market Size: 13
Innovation: 13
Education/Training: 9
A newcomer to the top 10, Canada is on a steady ascent to the forefront of the world's most competitive countries. It enjoys high-quality transportation and telecommunications infrastructure, efficient labor and financial markets, and transparent institutions. The albatross around its neck is its national debt, which stands at 70% of GDP. But Canada is slowly chipping away at that, too, by running small budget surpluses in recent years.
No. 11: Hong Kong
Market Size: 38
Innovation: 24
Education/Training: 28
Since the transfer of its sovereignty from Britain to China in 1997, the Hong Kong Special Administrative Region has proved itself a worthy member of the upper echelons of global competition. It garners high marks for efficiency and the sophistication of its financial markets. But excellent fiscal management and low government debt are the things really driving the city-state's performance. However, it is handicapped by a small domestic market and its relatively weak standing in health, education, and training.
No. 12: Britain
Market Size Rank: 6
Innovation Rank: 17
Education/Training Rank: 18
One of the biggest shocks in this year's study was Britain's fall out of the top 10, to the 12th-most competitive country in the world. According to the WEF, Britain is hampered by high taxes, a low national savings rate, and public indebtedness. But it still has plenty of strengths on the global stage (after all, China is ranked No. 30): Britain remains the world's sixth-largest domestic economy and, despite the pain in its banking sector, offers efficient labor and among the world's most sophisticated financial markets.
The global economy has been under threat for more than a year, and events in recent months have taken matters to a crisis stage. But judging by the World Economic Forum's annual Global Competitiveness Report, you would hardly know it. So far the financial meltdown has had little effect on the relative competitiveness of the world's most advanced countries, according to the ranking.
Of the record 134 countries surveyed this year, the majority at the top of the list remain European, while the U.S. continues to hold on to the No. 1 spot and Canada squeezes into the top 10. As in previous years, Singapore and Japan are the only Asian countries included at the top of the list, though Hong Kong comes close, at No. 11.
The results show that despite market turmoil in recent months that has brought some of the world's most powerful companies and even countries to their knees (BusinessWeek.com, 10/10/08), a range of nonmarket attributes such as education, regulation, and infrastructure still account for the advantages some nations enjoy over others.
More Than Financial Markets
The annual study from the Geneva-based World Economic Forum (WEF) assigns a score to a broad range of criteria affecting economies' business climates. It then categorizes them into 12 "pillars," including the size and efficiency of markets, innovation, infrastructure, business sophistication, and the quality of health and education. "The stability of the financial markets is one of them, but it's not the most important," says Jennifer Blanke, a senior economist at the WEF who oversees the study. "Those countries that have strengths in the other areas will bounce back quickly."
The European bloc remains strong, with six countries in the top 10. Switzerland, thanks to its high level of business sophistication and capacity for innovation, retained the second-place ranking it earned in the WEF's 2007 ranking (BusinessWeek.com, 11/6/07). The Nordic countries—Denmark at No. 3, Sweden at No. 4, and Finland at No. 6—continue to punch above their weight in this sphere as well. All share relatively healthy macroeconomic environments, run budget surpluses, carry very low levels of public indebtedness, and have some of the best functioning and most transparent institutions in the world.
Germany, however, despite its significant market size, has been dragged down two spots to seventh place this year due to its rigid labor markets. And Britain fell out of the top 10 entirely, sagging from ninth to 12th place, owing to a low national savings rate, increasing dependence on (now shaky) financial services, and eroding trust in political leadership.
Singapore Rises, Japan Slips
The two Asian nations in the top tier, Singapore and Japan, saw diverging fortunes. The strengthening of Singapore's institutional framework combined with a world-class infrastructure earned it a promotion to fifth place this year, up from seventh in 2007. Ninth-ranked Japan still holds its own as the world's second-largest economy, with commendable investment in research and development, but it fell one position vs. last year due to lingering high debt levels and mistrust of its financial institutions.
"The surprise was that the U.S. is still on top," Blanke says. The world's largest economy remains second-to-none in productivity and enjoys a flexible labor market, a very sophisticated business culture, and many of the world's best universities. Robust structural features help it to absorb economic shifts and downturns in business cycles.
But what hurt the U.S. this year was a weak macroeconomic environment. Like Japan, its debt levels are among the highest in the world. With so much money owed to creditors, the U.S. has less wealth to reinvest in its own future—and less wiggle room to address the current financial market crisis. "That's a warning sign we have been seeing for a while," Blanke says.
What About Emerging Economies?
Emerging countries with swelling economies are struggling to edge their way up the list. Burgeoning economic powerhouses such as Brazil, Russia, India, and China (the so-called BRIC countries) all rank among the top half of countries surveyed by the WEF, but their climb up the list is bogged down by a variety of factors. India, for example, boasts an impressive availability of scientists and engineers as well as top-notch research institutions. But these schools are limited to a very elite few. "At the end of the day, what we're really looking at is prosperity," Blanke says.
Of the BRIC countries, China is moving the fastest, jumping four places on this year's ranking, to No. 30. That's thanks in large part to the strides China continues to make in innovation, a surplus in its government budget, and above all the size of its domestic market. "It's huge and growing," Blanke says.
Still, these emerging markets have a way to go to before they enter the big leagues. Blanke predicts that at their current rate, it will take 10 years or more for them to challenge the top ranks of the world's most competitive economies. "They are going to do amazingly well, but they all require much more investment based on their populations," Blanke says.
Who's Winning the Race?
The financial crisis that has roiled global economies in recent months is a salient reminder of how economically interdependent the world has become. Competition among the major players has never been fiercer, which makes the Geneva-based World Economic Forum's annual ranking of the world's most competitive countries all the more important and informative.
The WEF surveyed 12,000 business leaders in 134 countries and pulled from publicly available economic data to produce its rankings and report. The result is a weighted measure of economic health indicators that shows who comes out on top—and who still has work to do.
No. 1: U.S.
Market Size: 1
Innovation: 1
Education/Training: 5
The U.S. retains its position this year as the world's most competitive country. Many robust structural features, such as business systems, formidable universities, and top-ranked innovation make the American economy remarkably powerful and productive. They also help to soften economic shocks such as routine business downturns and, with luck, the current financial crisis. However, despite having the largest economy on the planet, fiscal deficits in recent years have weakened the country's global standing and increased public indebtedness. That could limit flexibility in fiscal policy in the future and leave the U.S. more vulnerable to outside influences.
No. 2: Switzerland
Market Size: 37
Innovation: 3
Education/Training: 7
This small Alpine country has a lot more to brag about than just banks and beauty. Innovation is fueled by high spending on research and development relative to its size, as well as a strong relationship between a sophisticated business culture and world-class academic institutions. This means that research projects easily make their way out of the lab and onto production lines. Strong intellectual property protection encourages a high rate of patenting, where Switzerland ranks sixth, despite its diminutive size.
No. 3: Denmark
Market Size: 46
Innovation: 10
Education/Training: 2
Like its Nordic counterparts, Demark holds onto its rank from last year, coming in third, and shows potential for further widening its lead over them. It has overhauled its labor markets to create more flexibility for both businesses and employees. It also boasts among the best-run and most transparent financial institutions in the world. Additionally, a strong focus on education and high-quality health care keeps Denmark strong. Its taxes, however, are some of the highest in the European Union.
No. 4: Sweden
Market Size: 32
Innovation: 5
Education/Training: 3
Home to an outsize collection of world-beating companies—from Ericsson and Electrolux to home furnishing giant Ikea—Sweden keeps its position this year as the fourth most competitive country in the world. The most populous Scandinavian country enjoys strong financial institutions characterized by an ethical business climate and transparency in government policy-making. Sweden also gets high marks for education and training (ranking third globally) and exhibits a high degree of technological readiness. But high taxes and an inflexible labor market can be stifling to efficiency.
No. 5: Singapore
Market Size: 53
Innovation: 11
Education/Training: 8
The island city-state in Southeast Asia jumped to fifth place this year from seventh, largely as a result of a powerful institutional framework. The Singaporean government is the most transparent, least wasteful, and least burdensome on business of any country in the world. It also is the government most trusted by its citizens. Despite its small market size, Singapore also is buttressed by a world-class infrastructure and efficiency in all markets—goods, labor, and financial—where it ranks second globally.
No. 6: Finland
Market Size: 50
Innovation: 2
Education/Training: 1
The home of mobile phone giant Nokia, Finland continues to sustain high standards domestically, buoyed by a sophisticated business environment and a flexible workforce. The country ranks first in the availability of scientists and engineers and has the top-rated educational system in the world. Its young generation appears set to carry the country's influence into the future. Finland is also No. 1 in health and primary education.
No. 7: Germany
Market Size: 5
Innovation: 8
Education/Training: 21
With the best-ranked infrastructure of any country in the world, Germany, home to the autobahn, remains in the top 10 most competitive countries, although its position slumped to seventh place from fifth last year. Despite heavy investment in R&D and a sophisticated business culture, Germany suffers from increasingly weak universities and a rigid labor market. A lack of private wage determination, high nonwage labor costs, and the cost of terminating employees combine to throttle job creation.
No. 8: Netherlands
Market Size: 20
Innovation: 12
Education/Training: 11
The Netherlands rose two spots in the ranking this year, owing in part to its aggressiveness in adopting new technologies: The Dutch are among the most wired citizens on the planet, ranking second in Internet usage and ownership of personal computers. An efficient labor market compared with those of its neighbors and an excellent educational system also help boost its ranking.
No. 9: Japan
Market Size: 3
Innovation: 4
Education/Training: 23
The second-largest economy in the world, Japan finished in ninth place this year, down from No. 8 a year ago. Home to automobile and electronics giants like Toyota and Sony, Japan possesses a huge pool of scientists and engineers, spends vast sums on research and development, and demonstrates enormous capacity for innovation. Combined with a high level of business sophistication, these assets are what give Japan its competitive edge. But with one of the highest debt levels in the world and mistrust of public institutions and political leadership by its citizens, Japan runs the risk of falling further in the rankings.
No. 10: Canada
Market Size: 13
Innovation: 13
Education/Training: 9
A newcomer to the top 10, Canada is on a steady ascent to the forefront of the world's most competitive countries. It enjoys high-quality transportation and telecommunications infrastructure, efficient labor and financial markets, and transparent institutions. The albatross around its neck is its national debt, which stands at 70% of GDP. But Canada is slowly chipping away at that, too, by running small budget surpluses in recent years.
No. 11: Hong Kong
Market Size: 38
Innovation: 24
Education/Training: 28
Since the transfer of its sovereignty from Britain to China in 1997, the Hong Kong Special Administrative Region has proved itself a worthy member of the upper echelons of global competition. It garners high marks for efficiency and the sophistication of its financial markets. But excellent fiscal management and low government debt are the things really driving the city-state's performance. However, it is handicapped by a small domestic market and its relatively weak standing in health, education, and training.
No. 12: Britain
Market Size Rank: 6
Innovation Rank: 17
Education/Training Rank: 18
One of the biggest shocks in this year's study was Britain's fall out of the top 10, to the 12th-most competitive country in the world. According to the WEF, Britain is hampered by high taxes, a low national savings rate, and public indebtedness. But it still has plenty of strengths on the global stage (after all, China is ranked No. 30): Britain remains the world's sixth-largest domestic economy and, despite the pain in its banking sector, offers efficient labor and among the world's most sophisticated financial markets.
The World's Most Competitive Countries 2008
The annual World Competitiveness Yearbook from Swiss business school IMD ranks 55 countries on 323 criteria, ranging from the per capita GDP and economic growth to exports, computer penetration, and even the cost of mobile phone service. It also includes qualitative assessments of dozens of factors, such as the level of corruption, state support for education, attitudes towards globalization, and the regulatory framework.
The table below lists this year's ranking. To add a little spice, we've also included results from the World Economic Forum, which ranks countries according to their "network-readiness," or how prepared they are to succeed in the knowledge-based economy of the 21st century.
Country | WEF Global Competitiveness Index Rank 2008 | WEF Global Competitiveness Index Rank 2007 | IMD World Competitiveness Yearbook Rank 2008 | IMD World Competitiveness Yearbook Rank 2007 |
| United States | ||||
| Switzerland | ||||
| Denmark | ||||
| Sweden | ||||
| Singapore | ||||
| Finland | ||||
| Germany | ||||
| Netherlands | ||||
| Japan | ||||
| Canada | ||||
| Hong Kong | ||||
| United Kingdom | ||||
| Korea (South) | ||||
| Austria | ||||
| Norway | ||||
| France | ||||
| Taiwan | ||||
| Australia | ||||
| Belgium | ||||
| Iceland | NA | |||
| Malaysia | ||||
| Ireland | ||||
| Israel | ||||
| New Zealand | ||||
| Luxembourg | ||||
| Qatar | NA | NA | ||
| Saudi Arabia | NA | NA | ||
| Chile | ||||
| Spain | ||||
| China | ||||
| United Arab Emirates | NA | NA | ||
| Estonia | ||||
| Czech Republic | ||||
| Thailand | ||||
| Kuwait | NA | NA | ||
| Tunisia | NA | NA | ||
| Bahrain | NA | NA | ||
| Oman | NA | NA | ||
| Brunei Darussalam | NA | NA | NA | |
| Cyprus | NA | NA | ||
| Puerto Rico | NA | NA | ||
| Slovenia | ||||
| Portugal | ||||
| Lithuania | ||||
| South Africa | ||||
| Slovak Republic | ||||
| Barbados | NA | NA | ||
| Jordan | ||||
| Italy | ||||
| India | ||||
| Russia | ||||
| Malta | NA | NA | ||
| Poland | ||||
| Latvia | NA | NA | ||
| Indonesia | ||||
| Botswana | NA | NA | ||
| Mauritius | NA | NA | ||
| Panama | NA | NA | ||
| Costa Rica | NA | NA | ||
| Mexico | ||||
| Croatia | ||||
| Hungary | ||||
| Turkey | ||||
| Brazil | ||||
| Montenegro | NA | NA | ||
| Kazakhstan | NA | NA | ||
| Greece | ||||
| Romania | ||||
| Azerbaijan | NA | NA | ||
| Vietnam | NA | NA | ||
| Philippines | ||||
| Ukraine | ||||
| Morocco | NA | NA | ||
| Colombia | ||||
| Uruguay | NA | NA | ||
| Bulgaria | ||||
| Peru | NA | |||
| Argentina | ||||
| Venezuela | ||||
No comments:
Post a Comment