China rises in global competitiveness ranking

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China has moved up one place to 27th spot on the latest Global Competitiveness Index (GCI), as a result of “steady, albeit incremental, improvements to its overall competitiveness score”. That makes it the highest placed country among the BRICS group of large emerging markets.

The Global Competitiveness Report was compiled by the Geneva-based World Economic Forum (WEF), a non-profit organization, as an annual assessment of factors driving productivity and prosperity.

In compiling the index, researchers tracked the performances of 137 economies in 12 pillars of competitiveness: institutions, infrastructure, macroeconomic environment, health and primary education, higher education and training, goods market efficiency, labor market efficiency, financial market development, technological readiness, market size, business sophistication, and innovation.

Source: the World Economic Forum

Since last year, China has made the largest gains in technological readiness, owing to higher information and communications technology (ICT) penetration and the extent to which foreign direct investment has been bringing new technologies to China, according to the WEF report.

Other significant advances have been made in terms of goods market efficiency, as a result of cuts to red tape for starting a new business compared to last year.

China has made progress in all categories except the fields of macroeconomic environment and infrastructure.

Source: the World Economic Forum

Switzerland, for the last nine years, has topped the list, narrowly ahead of the US and Singapore. Other G20 economies in the top 10 are Germany (5th), the United Kingdom (8th) and Japan (9th).

War-torn Yemen finished in last place.

Prospects for long-term economic development

"After a long period of low growth following the global financial crisis, the world economy appears to have picked up speed," the report stated.

However, the WEF warned that a decade after the financial crisis, the prospects for a sustained economic recovery remain at risk due to a widespread failure to put in place reforms necessary to underpin competitiveness and bring about much-needed increases in productivity.

Analysis of the GCI pointed to three main challenges and lessons.

First, 10 years after the crisis, the financial sector, where levels of "soundness" have yet to recover from the shock of 2007 and in some parts of the world are declining further, remains vulnerable.

Second, the reason innovation often fails to ignite productivity is due to an imbalance between investments in technology and efforts to promote its adoption throughout the wider economy.

Third, competitiveness is enhanced, not weakened, by combining degrees of flexibility within the labor force with adequate protection of workers' rights. With vast numbers of jobs set to be disrupted as a result of automation and robotization, creating conditions that can withstand economic shock and support workers through transition periods will be vital.