How Competitive Are You?

WEF’s Global Competitiveness Report (available here, no signup) is updated fro 2017. No major surprises as the winners continue to be Switzerland, Singapore and the U.S. But the report does highlight “declining openness” as a threat to growth and prosperity.

The report summary is worth an extensive quotation:

Many of the competitiveness challenges we see today stem from the aftermath of the financial crisis. Today, productivity and growth are not picking up in advanced economies, and the consequences of low and even negative productivity growth in many emerging economies are now evident. The great recession led many advanced economies to implement very loose monetary policy, which in turn fueled a global commodities boom (Box 3) that masked many of the competitiveness challenges of commodity-exporting emerging markets. Vulnerability to commodity price fluctuations in emerging economies and the promises of the Fourth Industrial Revolution underscore the importance of innovation as a source of competitiveness and economic diversification to reignite growth.

Against this background, it is clear that (1) monetary stimulus is not enough to reignite growth if economies are not competitive, (2) an increasingly important element of competitiveness is creating an enabling environment for innovation, and (3) innovation in turn goes hand in hand with openness and economic integration.

 

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