Competition is the cornerstone of true development in our capitalist world. The free market concept is based on competition that creates the best product for the customer. Economists around the world condemn anti-competitive measures because they feel that they suffocate innovation and growth. We have seen a lot of innovation and disruption in the last two decades; some of the biggest companies in the world right now did not even exist a decade ago.
So how do countries around the world compare in terms of their levels of productivity? Well, the 2015-2016 World Competitiveness Report from the World Economic Forum has helped shine some light onto that very question. From the report, the World Economic Forum sets its definition for what it means by “competitive” as such:
“We define competitiveness as the set of institutions, policies, and factors that determine the level of productivity of an economy, which in turn sets the level of prosperity that the country can earn.”
There are 12 different pillars of economic competitiveness, such as education and infrastructure, upon which the ranking is based. According to the World Economic Forum these are the 10 most competitive economies in the world right now:
The United Kingdom doesn’t have a huge economy, but it is one in which the participants have the right opportunities to grow. It isn’t surprising to see that many of the biggest companies in the last decade or so are from the United Kingdom; the country has an excellent infrastructure in place for its citizens. The levels of education, healthcare, and infrastructure all led to it being ranked so highly when compared to the rest of the world.
The reason that United Kingdom is at number 10 and not higher is due to its geographical and macroeconomic position. Its geographical location severely limits its production capabilities, as it becomes uncompetitive to import so many inputs. The government also has a lot of debt that pushed United Kingdom down to the 10th rank. It is still a very impressive economy though, and the UK is a place where people are encouraged to participate through great education.
Sweden was at number 10 spot in last year’s competitive ranks but it has moved up to land at 9th this year. This is due to the government’s strong commitment towards developing its own citizens and its workforce. Sweden has one of the best educational infrastructures in the whole world. Education is free for most citizens and academic and research contributions are highly encouraged by the government.
Any Swede who writes a book gets a grant from the government for their work. Such policies ensure that the playing field in Sweden is level, and people from different walks of life can create their own businesses due to a strong financial safety net and great education.
The next time someone tells you that Finland is too socialist, just show them where they stand in the world competitive index. The reason that Finland is so high on the list is because of its excellent infrastructure. It is only at 8 because of the small size of its market; with a total population of 5.5 million the country cannot compete when it comes to GDP numbers. Finland also has excellent financial security for its people, which in turn, makes them more prone to take risks and participate in entrepreneurial ventures.
Hong Kong may have a confusing form of government, in some ways independent from China while still in a sense a part of China. Despite this, it does have the 7th most competitive economy in the world. Hong Kong reaches this high rank due to the potential of its markets and great infrastructure investments made by the government.Hong Kong was once lagging behind the times but the country has developed greatly in the previous decades, which provides a lot of potential for investment and growth.Hong Kong does have its issues however, such as a lack of business sophistication and the lack of innovation in the industries.
Visiting Tokyo feels like time travelling to the future; it may well be the greatest and largest human settlement in all of history. Japan overall has a fascinating relationship with technology, and they seem to embrace it much more than most other countries. Japan ranks so highly in the world competitiveness index due to their investments in infrastructure. The country currently is facing a huge stagnation period when it comes to the economy though; and this has led the government to take unprecedented measures to fuel growth.
If Japan’s current moves play out the way they are intended to play out, we might be seeing Japan ranked even higher next year. The Japanese government applied negative interest rates, a tactic that is unheard of in developed countries. This was done to prevent the act of saving and instead promote investments. It might well work to increase the competitiveness if there are no unintended consequences to the move.
Throughout this list, it is clear that economic competitiveness is driven by infrastructure investments. Though the financial markets of Netherlands are not as strong as some of the other countries in this list, they still rank highly among the pillars of economic development. A fantastic policy on education means that more of the population are ready to be a part of the workplace. Netherlands also has one of the safest environments in the world and obstacles to starting businesses are very low.
It is hard to believe that Germany has managed to grow so much despite being in such an unstable position till just a few decades ago. Germany invested early in its infrastructure and its institutions and is reaping the rewards now. Germany also has a great economic environment and the government has done a great job with its economic policies. The nation is one of the few developed countries that do not have a looming debt problem that could threaten to derail things in the future.
No competitive list is complete without America. America is widely known as one of the most competitive markets in the whole world. The USA has a great financial industry and funding is readily available for the right business ideas. The only reason America is at number 3 and not in the top 2 spots is the large amount of debt that limits the government’s ability to invest in infrastructure.
Singapore was one of the worst financially hit countries in the 90s. The growth and development that has happened here in just two decades is incredible. Singapore is very small, which keeps it from being a major player in the world market, but the market itself is very competitive. Like most of the top countries in this list, Singapore too has managed to become competitive due to investments in infrastructure, education, and healthcare. Singapore is one of the most expensive places in the world to live in but that doesn’t stop businesses from opening and succeeding in the country.
Switzerland is on this list for the same reason as Netherlands and Finland, but it takes the number 1 spot because it managed to achieve more success than any of them. Switzerland is often seen as the model world economy due to the high amount of focus on developing its people. With some of the best education and training in the world being provided for free, it is not surprising that the participants in Switzerland’s economy can compete on a level playing field. The market may be small, but within it there a lot of potential for companies to step up.by