In our second installment, developed countries are proving pessimists wrong with their ability to rebound from near-global collapse. These five nations will really be turning heads in 2014…
As you saw in the first half of the World Economic Forum’s top ten countdown of Global Competitiveness, some countries slipped in the rankings as they were dragged down by, among other things, macroeconomic challenges and fiscal weaknesses.
For these remaining five countries, however, all of them either preserved their overall competitive performance from the previous year, or they showed marked improvement from the year before — giving them strong momentum as they welcome 2014.
Without further ado, here are the final five…
5) United States
After sliding down the list for four straight years, the US is back in contention with a vengeance. This year, we moved up two positions on the strength of a stabilized banking sector that saw remarkable improvement from 31st spot three years ago to 10th place. There’s also been a vastly improved assessment of our public institutions, which was weakened significantly during the recession. Though pillars related to government fiscal management are still down, America’s competitiveness remains strong through technological innovation and world-class post-secondary education. While our unemployment rate remains high by our own standards, there’s no denying the size of our domestic economy, which is still the largest in the world by a wide margin.
Rising two spots from last year, the Germans are a top contender when it comes to doing business. Its goods market is efficient and trade is characterized by strong local competition and low market dominance by large companies. Innovation is synonymous with Germany, a country which sees its firms and industries invest heavily in R&D and are quick to adopt to new technologies. This is further supported by offering high quality research institutions and a stable output of scientists and engineers. Additionally, a large domestic market and strong exports makes Germany the 5th largest country by market size. Its weak points are found in labor markets, led by poor wage determination and the high cost of firing. And although its education system is considered good, it still trails the majority of those in the top ten.
Retaining its 3rd place ranking this year, Finland is rated as having the most efficient and transparent public institutions in the world. Its private sector is also very strong (3rd place), as are its health and its education pillars, the latter of which has seen significant government investments over the past decade. The focus on education specifically has laid the foundation for great improvement in its innovation competitiveness. Although the country’s seen a modest rise in inflation which has slightly tarnished its healthy macroeconomic environment, it is in a much more stable state than other eurozone nations.
The only country to rank in the top 3 of seven CGI pillars, Singapore boasts a stellar performance in labor efficiency, goods market efficiency and financial market developments. Its sound macroeconomic environment and world-class infrastructure and transportation is a result of having strong fiscal management as well. As the 2nd overall country for the third consecutive year, Singapore consistently shows its economic prowess by making big strides in higher education, business sophistication, and innovation. The most competitive country in Asia has also seen major improvements in private sector sophistication and innovation, which the WEF sees are the main drivers for Singapore’s future prosperity.
And last but not least…
Tops in last year’s report as well, the Swiss continue to be leaders in innovation, labor market efficiency, and business sophistication. The country is proactive in adapting to the latest technologies, and its government is among the most effective and transparent in the world. And in a time when neighboring countries are still struggling, Switzerland maintains one of the most stable economic environments anywhere. Although every country on this year’s list has room for improvement, Switzerland really has little weaknesses to speak of. Its only blemishes would be in the area of innovation, which could be strengthened through boosting of its university enrollment rate of 56.8% and increasing the participation of women in the economy.
Some of you may be wondering why superpowers such as China (29th) or Russia (64th) didn’t even come close to making the top ten.
According to the WEF, factors such as corruption, security and ethical standards, along with complex investment barriers and poor assessments of their public institutions are what prevent them from gaining any ground even though they boast some of the biggest economic achievements in recent years.
Also, with weak business sophistication and a low capacity for innovation, the WEF believes it would be increasingly challenging for them to sustain their current growth trajectory for much longer.