The World Economic Forum publishes a yearly Global Competitiveness Report (GCR), and uses it to rank countries based on the Global Competitiveness Index. It has a range of competitiveness, and the factor variable in consideration is different. Some countries compete based on their factor endowments, primarily unskilled labor and natural resources. Companies compete on the basis of prices and sell basic products or commodities, with their low productivity reflected in low wages.
As wages rise with advancing development, countries move into the efficiency-driven stage of development, when they must begin to develop more efficient production processes and increase product quality. At this point, competitiveness becomes increasingly driven by higher education and training, efficient goods markets, efficient labor markets, developed financial markets, the ability to harness the benefits of existing technologies, and its market size, both domestic and international.
Finally, as countries move into the innovation-driven stage, they are only able to sustain higher wages and a higher standard of living if their businesses are able to compete by providing new or unique products. At this stage, companies must compete by producing new and different goods using the most sophisticated production processes and through innovation. This calculation provides a much more complex and realistic consideration for all variables, compared with more simpler for using country individual GDP alone.
For 2021 Ranking, Switzerland, followed by Sweden, Denmark. All European countries. Where we may expect for the change due in 2022 Ranking when available, as Russia-Ukraine conflict happens in 2022. We can expect Singapore to lead not just regionally, but globally in ranking agin. In 2019, Singapore ranked first. An island city-state without any natural resources turns into a developed country, with the friendly policies adopted by the government towards foreign investment, and an efficient and “honest” government being the well known factor globally recognised. But if you look deeper, foreign investment is a welcome policy everyone can copy, but an efficient and “honest” government, not every country can do, this is what we called undisputed competitive advantage. You can imagine, corruption being the grey area and foreign investors found perceived risk with the country high in that. If foreign investors can do business anywhere it is the same, for sure they will pick the less risky country to invest.
Countries that can attract very wealthy people move all their wealth over, so to speak, not many. They are smart people on the planet, if they are willing to do so, it must make business sense for them to do so. As you can see from the news, The Super Rich are choosing Singapore as the World’s safest haven. Money is moved into Singapore, a safe harbour for the region’s wealthiest tycoons and their families. When a country lacks natural resources, the strategy that can be leveraged for the country’s development is much lesser compared with those with plenty of natural resources. The future of competitiveness is moving away from the traditional resources and more on intangible capital, such as knowledge, easy to do business and trade, business friendly environment and tax structure, and “honest” and efficient government. It seems the Singapore government is fully aware of what needs to be done to build up the nation. Of course the world will have other good examples for what will be a next century world competitiveness nation you can look at across the world, we are just using Singapore as an example.
As everyone expects, if the world recession does not hit in 2022, most probably 2023. Every country from government, business and individual citizens need to prepare well for it. Small countries like Singapore use its track record to tell the world, when a country lacks natural resources and how it can rise as a good inspiring example, where most of the people can learn at least one or two lessons from it. Inertia and innovation is always on a different path. When a country is rich in natural resources, they do not think how to efficiently use what they have. Some great companies who have the glories of the past, or be the market leader lack incentive for disruptive innovation.
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