- The Straits Times
Singapore is now the world’s most competitive economy after beating out the United States, which was last year’s number one, the World Economic Forum (WEF) said on Wednesday (Oct 9).
The US now sits in second spot, where Singapore was placed last year, in the Global Competitiveness Index (GCI) published with the Global Competitiveness Report 2019.
The annual GCI ranks 141 economies through 103 indicators organised into 12 pillars: institutions, infrastructure, Information and communications technology (ICT) adoption, macroeconomic stability, health, skills, product market, labour market, financial system, market size, business dynamism, and innovation capability.
As this year’s world number one, Singapore earned an overall score of 84.8, up from last year’s 83.5.
Singapore ranked first on three pillars: infrastructure, health and labour market. It also came in second for institutions (losing to Finland), product market and financial system (both losing to Hong Kong).
According to the report, Singapore scored full marks on the pillar for health, which is an assessment of health-adjusted life expectancy.
The Republic also scored close to full marks (99.7) on macroeconomic stability, but was ranked 38th because 35 other economies, including Malaysia, scored a perfect 100. France and the US each scored 99.8 and ranked 36th and 37th respectively.
The US, which remains the world’s most competitive large economy, saw its overall score fall from 85.6 in 2018 to 83.7 in 2019.
Nonetheless, the US ranks first on the pillar of business dynamism and second on the innovation capability pillar.
At third place on the GCI is Singapore’s longtime rival Hong Kong, which saw its ranking rise one spot with an improved score of 83.1 from 82.3 in 2018.
In May this year, Singapore was also named the world’s most competitive economy, overtaking Hong Kong and the US in the World Competitiveness Ranking compiled by Swiss business school IMD.
The most improved economy in WEF’s index this year was Vietnam, which rose 10 places from 2018 to 67th spot this year.
When comparing regions, Asia-Pacific is the most competitive in the world, followed closely by Europe and North America.
On average, the 141 economies scored a dismal 61 points over 100. “This global competitiveness gap is of even more concern as the global economy faces the prospect of a downturn,” the WEF said.
However, some of this year’s better performers – including Singapore and Vietnam – appear to be benefiting from the trade feud through trade diversion, WEF added.
“The report shows that those countries which integrate into their economic policies an emphasis on infrastructure, skills, research and development and support those left behind are more successful compared to those that focus only on traditional factors of growth.” said Klaus Schwab, founder and executive chairman of the WEF.
In a statement, the WEF said that the global economy “remains locked in a cycle of low or flat productivity growth despite the injection of more than US$10 trillion by central banks”.
“While these unprecedented measures were successful in averting a deeper recession, they are not enough on their own to catalyse the allocation of resources towards productivity-enhancing investments in the private and public sectors,” it said.
Noting that monetary policies are starting to run out of steam, the WEF said it is now “crucial for economies to rely on fiscal policy and public incentives to boost research and development, enhance the skills base of the current and future workforce, develop new infrastructure and integrate new technologies”.