Singapore: Singapore shed a spot in the latest world competitiveness ranking published by the International Institute for Management Development (IMD).
Last week, the IMD's World Competitiveness Centre (WCC) revealed that the city-state was placed fourth out of 64 economies in its annual report after it had climbed to third a year earlier. The republic ranked 5th in 2021 after coming in first in 2019 and 2020. Denmark, Ireland and Switzerland took the top three places. Making up the rest of the top 10 are the Netherlands in fifth, followed by Taiwan, Hong Kong, Sweden, USA, and UAE.
India fell 3 rungs to finish 40th but is still in a better position than it was between 2019-2021 when it was placed 43rd three years in a row. Based on the IMD report, the country improved in government efficiency but fared slightly poorer than other countries in business efficiency, infrastructure, and economic performance. Specifically, the top three measures that helped India in its score are exchange rate stability, compensation levels and improvements in pollution control.
The report added that the challenges facing India in 2023 are maintaining its high GDP growth, coping with financial market volatility, controlling inflation and fiscal deficit, accelerating digital transformation, and mobilising resources for infrastructure development.
The 2023 results also highlight how economies which were late to open up after the COVID-19 pandemic are starting to see improvements in their competitiveness. For example, Thailand, Indonesia and Malaysia improved in the ranking whereas economies like Sweden and Finland which opened early have fallen back.
Europe shined in the ranking, in 2022, with five economies in the top 10.
First published in 1989, IMD World Competitiveness Yearbook (WCY), is a comprehensive annual report and worldwide reference point on the competitiveness of countries.
The report uses a combination of surveys, statistical data and trends to benchmark the competitiveness of 64 countries around the world. It analyses and ranks countries according to how they manage their competencies to achieve long-term value creation. In addition to GDP and productivity, it looks into how enterprises cope with political, social and cultural factors.
"A country's ability to generate prosperity for its people is a key determiner of success. It's not what China does yet and it's not what the US even does fully yet," said Professor Arturo Bris, Director of the WCC.
According to the institute, which is co-headquartered in Switzerland and Singapore, the ranking provides a "valuable tool for evaluating highly contrasting business environments, for supporting international investment decisions, and for assessing the impact of various public policies."
It also "serves managers and policymakers alike and is an indicator of the quality of life in each country it assesses."
The report is produced with the support of a network of 57 local partner institutes. In Singapore, the institute works with the Ministry of Trade and Industry's economics division, and the Singapore Business Federation. In India, it partners with the National Productivity Council.
The World Competitiveness Ranking is based on 336 competitiveness criteria selected as a result of comprehensive research using economic literature, international, national, and regional sources, and feedback from the business community, government agencies, and academics. The criteria are revised and updated regularly as new theories, research, and data become available and as the global economy evolves.
The institute explains that the results are based on a mixture of hard data - 164 competitiveness criteria selected as a result of comprehensive research using economic literature, international, national, and regional sources, plus feedback from the business community, government agencies, and academics - and 92 survey questions answered by 6,400 senior executives. Hard data accounts for two-thirds of the overall ranking results, whereas the survey data represents one-third.
In this year's ranking, Ireland made the most impressive overall improvement as it leapt from 11th place to second. This was on the back of its extraordinary achievement in economic performance. It's ranking in this criterion jumped from 7th to first. The other factors that aided its climb are a skilled workforce, a high educational level, policy stability and predictability, a competitive tax regime, and a business-friendly environment.
An observation from the report is that the countries on the top of the list each have a unique approach to becoming competitive. Most are small nations that make good use of access to markets and trading partners. Apart from being smaller, the most competitive economies also tend to have strong and efficient institutions.
Denmark's top position is based on its continuous achievements across all four competitiveness factors measured. It remains first in business efficiency and second in infrastructure, and shows slightly improved results in government efficiency, going to fifth from sixth.
Switzerland retains third place thanks to its strong performance across all competitiveness factors measured. It remains first for government efficiency and infrastructure, ranks seventh in business efficiency (a decline from fourth), and moves up from 30th to 18th in economic performance.
Singapore's decline on the other hand was due to components within the government efficiency factors, such as competition legislation and adaptability of government policy. Singapore however performs well in other indicators including employment in which it came second, international investment which it placed fourth and productivity and efficiency in which it took sixth place.
Christos Cabolis, the WCC's Chief Economist, commented, "Navigating today's unpredictable environment requires agility and adaptability. Countries which excel are building resilient economies, such as Ireland, Iceland, and Bahrain. Their governments are also able to adapt policies based on current economic conditions in a timely fashion. The UAE, Saudi Arabia, Qatar, and Singapore are also key examples of this."