More than a decade after the global financial crisis, the world’s economies are still not meeting competitiveness benchmarks and are failing to reap the rewards of the fourth Industrial Revolution, according to the World Economic Forum (WEF)’s 2019 Global Competitiveness Report.
In keeping with the WEF’s pessimistic outlook, several of the world’s most developed economies slid down the rankings in this year’s report. Singapore was the world’s most competitive economy in 2019, pushing the United States out of the top spot and into second place. Hong Kong, the Netherlands and Switzerland make up the remainder of the top five. The big hitters such as the United Kingdom, Canada and Germany all fell this year, showing that even the G20 countries experienced challenges in the stagnant economic environment.
Measuring productivity
As its name suggests, the Global Competitiveness Report tracks how competitive a region and countries are in comparison to their global counterparts. To get an accurate assessment, researchers examine factors relating to productivity. These include infrastructure, ICT adoption, macro-economic stability, health, the labour market, business dynamism, innovation capability and market size.
The report looks at 141 economies, which account for 99 per cent of global GDP. The Caribbean is viewed as a region with Latin America, and not all Caribbean countries are evaluated due to shortages of available data. Of the ones that were, the WEF rates Barbados as the most economically competitive nation in the Caribbean, putting it at number 77 on the global rankings. The Eastern Caribbean island is closely followed by the Dominican Republic, Trinidad and Tobago and Jamaica – ranked 78, 79 and 80 respectively. It’s a mixed bag for the Caribbean nations included in the research. Jamaica and Trinidad and Tobago lost ground this year due to rising crime and slowing export growth, while Barbados and the Dominican Republic moved up the ranks. Barbados scored highly in terms of health, its stable financial system and its adoption of technology and the Dominican Republic benefitted from a strong labour market. In the Latin America/Caribbean region as a whole, Chile is the top performer (33rd) and Haiti the worst (138th).
The global context
In terms of regional results, Asia-Pacific is the most competitive, followed by Europe and North America. The rise of the East can be attributed to strong performances by Singapore, Hong Kong, Japan and China. Although lagging in 67th place, Vietnam is the country which has shown the most improvement in its rankings, according to the report.
At the other end of the scale, sub-Saharan Africa is the lowest ranked with 25 of its 34 economies scoring below 50. While there have been improvements in Namibia, Rwanda and Uganda, the region is still far short of global targets, particularly in relation to health.
It’s a different story in North Africa. Together with the Middle East, MENA continues to be a region on the rise and the WEF has particular praise for its progress in ICT adoption and well-developed infrastructure. Israel is ranked 20th, the UAE 25th and Qatar 29th. Kuwait shows the most improvement of the MENA states, moving up 8 places to rank 46th.
Rankings aren’t everything, however. A more holistic approach to the data shows that, despite losing out on the top spot, the US remains top in categories such as innovation and business dynamism. The Nordic countries are the most technologically advanced, showing innovative approaches to living conditions and social protection and, when it comes to green growth, Denmark, Uruguay and Zimbabwe have increased their renewable energy capacity the most.
While the Caribbean trails well behind the best performers in all categories, its strongest areas are health, infrastructure and macro-economic stability. Its weakest areas are in innovation capacity, institutions, ICT adoption and market size.
Unsustainable
The lofty Sustainable Development Goals set in place by the United Nations came with a deadline and, according to the WEF, the world is not on track to meet those targets by 2030. The pace of extreme poverty reduction is slowing; one in nine people are experiencing hunger and, as of 2015, 46 per cent of the world’s population were struggling to meet their basic needs and living on less than US$5.50 a day.
The WEF takes a progressive approach to addressing the competitiveness gap, stressing that economic growth doesn’t just happen but must be nurtured by forward-thinking policy makers who are not just fiscally-minded but also take into account environmental and social constraints. But with countries such as the top-ranked Singapore still falling short, how can the Caribbean catch up?
Through ‘investment-led stimulus’, suggests the report. In particular, investment that prioritizes productivity in infrastructure, human capital and R&D. These should also be accompanied by structural reforms that make it easier for businesses to flourish – a longstanding issue in Caribbean nations.
Education is also a vital component to cover skills gaps in the workforce, increase digital proficiency and encourage innovative thinking. Any move towards greater uptake of technology should come with a corresponding investment in human capacity, according to the report, and low-income countries such as those in the Caribbean should be wary that increased technology and globalisation often have the knock-on effect of increasing inequality.
2020 will be a tough year for the global economy, according to the WEF which warns of a “likely downturn”, meaning that it will be more important than ever for developing countries to shore up their economic resilience. While external shocks such as climate concerns and trade and geopolitical tensions cannot be ignored, domestic obstacles remain the primary reason for subdued growth in the Caribbean.
