The World Economic Forum’s Global Competitiveness Report for 2017-2018 has identified corruption, crime and political instability as the biggest barriers for countries development in competitiveness.
A decade on from the global financial crisis, the prospects for a sustained economic recovery remains at risk due to a widespread failure on the part of leaders and policy-makers to put in place reforms necessary to underpin competitiveness and bring about a much-needed increase in productivity, the report said.
For the ninth consecutive year, the report’s Global Competitiveness Index (GCI) finds Switzerland to be the world’s most competitive economy, narrowly ahead of the United States and Singapore. Other G20 economies in the top 10 are Germany (5), the United Kingdom (8) and Japan (9). China is the highest ranking among the BRICS group of large emerging markets, moving up one rank to 27.
Drawing on data going back 10 years, the report highlights in particular areas of greatest concern. These include the financial system, where levels of “soundness” have yet to recover from the shock of 2007 and in some parts of the world are declining further, the WEF said. “This is especially of concern given the important role the financial system needs to play in facilitating investment in innovations related to the Fourth Industrial Revolution,” it said.
Another area is that competitiveness is enhanced, not weakened, by combining degrees of flexibility within the labour force with adequate protection of workers’ rights. “With vast numbers of jobs set to be disrupted as a result of automation and robotisation, creating conditions that can withstand economic shock and support workers through transition periods will be vital,” it said. “Global competitiveness will be more and more defined by the innovative capacity of a country.
Talents will become increasingly more important than capital and therefore the world is moving from the age of capitalism into the age of ‘talentism’. “Countries preparing for the Fourth Industrial Revolution and simultaneously strengthening their political, economic and social systems will be the winners in the competitive race of the future,” said Klaus Schwab, founder and executive chairman, World Economic Forum.
South Africa (61st) remains one of the most competitive countries in sub-Saharan Africa, and among the region’s most innovative (39th) – but it drops 14 positions in the overall rankings this year, WEF said. “South Africa’s economy is nearly at a standstill,
with GDP growth forecast at just 1.0% in 2017 and 1.2% in 2018 – hit by persistently low international demand for its commodities, while its unemployment rate is currently estimated above 25% and rising,” it said.
On average, sub-Saharan Africa’s competitiveness has not changed significantly over the past decade and only a handful of countries – Ethiopia (108), Senegal (106), Tanzania (113), Uganda (114) – are continuing to improve this year. Leading the ranking in the region come Mauritius (45), Rwanda (58), South Africa (61) and Botswana (63). “In general, Africa is still being penalised by its macroeconomic environment.
Average inflation grew to double digits last year while public finances are still being affected by relatively low commodity prices, which curbed public revenues and hence government investments. “At the same time, Africa’s financial markets and infrastructures remain underdeveloped, and institutions’ improvement process hit a setback this year as political uncertainty is growing in key countries,” the report said.