Competitive countries benefit from the Fourth Industrial Revolution – but many nations have yet to embrace the future.
The US is the most competitive nation on the planet, followed closely by Singapore, Germany, Switzerland, Japan and the Netherlands.
According to the World Economic Forum’s (WEF) Global Competitiveness Report, these are the six nations that lead the way in a variety of fields including human capital, entrepreneurial culture, disruptive ideas, adoption of IT, meritocracy, social trust, property rights, health and education.
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Klaus Schwab is founder and executive chairman of the WEF. He stresses how global competitiveness has been radically impacted by what is known as the Fourth Industrial Revolution – the emerging technologies such as robotics, artificial intelligence, quantum computing and biotechnology.
“I foresee a new global divide between countries that understand innovative transformations and those that don’t,” Schwab explains. “Only those economies that recognise the importance of the Fourth Industrial Revolution will be able to expand opportunities for their people.”
The WEF includes a total of 140 nations in its report, ranked according to 98 different indicators. Top-ranked US has a score of 85.6%, while bottom-ranked Chad scores 35.5%. The global average is 60%.
The research throws up some intriguing results. Canada, for example, has the most diverse workforce, while Denmark has the least hierarchical corporate culture. Germany is top of the pile when it comes to “mastering the innovation process, from idea generation to product commercialisation”, while attitudes towards entrepreneurial risk are most positive in Israel.
US companies are fastest when it comes to embracing change, Switzerland is the most effective at retraining its labour force, and Singapore leads in infrastructure (with an almost perfect score of 95.7%), “thanks to its world-class transport infrastructure and connectivity”.
In an era when international trade tensions are escalating and voters protest against globalisation, the report stresses how open and collaborative economies are far more competitive than protectionist ones. So factors such as low-tariff and non-tariff barriers, the hiring of foreign workers and collaboration in patent applications all help industry to innovate.
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The report also argues that attempts by governments to eradicate inequality in society do not necessarily compromise the competitiveness of its economy. Progressive taxation, welfare safety nets and strong investment in human capital all help enormously.
“It is possible to be pro-growth and inclusive at the same time,” says Thierry Geiger, head of research and benchmarking at the WEF, pointing out how workers in the world’s 10 most competitive nations work on average five hours fewer per week than workers in Brazil, India or Russia.
The report suggests that, overall, governments need to address all factors that can potentially raise competitiveness, since a strong performance in one field will not compensate for a weak performance in another.
For example, new technology can help low-income and middle-income countries to suddenly become much more competitive, but only if their governments also invest in more traditional areas such as governance, infrastructure and human skills.
This explains how the US has secured its place at the top of the competitiveness rankings. It scores higher than any other nation in business dynamism, labour market efficiency and financial systems.
But it is not all good news. The WEF warns how, in the US, there are “indications of a weakening social fabric and worsening security situation”. Indeed, the homicide rate there is five times the average in all the advanced economies. It also lags behind many nations in judicial independence, corruption, life expectancy and adoption of IT. It may be top of the pile now, but other nations are catching up.