The World Economic Forum’s new Global Competitiveness Report 2016-2017 looked at 138 nations, and it put the United States, Singapore and Switzerland at the top.
This year’s edition highlights that declining openness is threatening growth and prosperity. It also highlights that monetary stimulus measures such as quantitative easing are not enough to sustain growth and must be accompanied by competitiveness reforms. Final key finding points to the fact that updated business practices and investment in innovation are now as important as infrastructure, skills and efficient markets.
One other conclusion was that central banks cannot save the world’s economy no matter how low they drop interest rates or buy back fixed income instruments.
Based on recent history, only a few nations have the wealth and the research and development facilities at the government and individual company level to “invest in innovation” via both invention and access to capital.
The World Economic Forum (WEF) starts the report with a relatively negative point of view:
The Global Competitiveness Report 2016–2017 comes out in the context of persistent slow growth and a near term outlook that is fraught with renewed uncertainty fueled by continued geopolitical turmoil, financial market fragility, and sustained high debt levels in emerging markets. Despite unorthodox monetary policy, global GDP growth has fallen from levels of 4.4 percent in 2010 to 2.5 percent in 2015. This fall in growth reflects not only the productivity slowdown documented in last year’s Report, which has continued during 2016, but also what now seems like a long-term downward trend in investment rates.
Several international organizations, including the International Monetary Fund, the World Bank and the Organization for Economic Cooperation and Development (OECD) have made similar warnings about growth.
However, all is not lost:
On the bright side, tremendous promise for higher economic growth and societal progress dawns with the Fourth Industrial Revolution. Based on digital platforms ,the Fourth Industrial Revolution is characterized by convergence of technologies that is blurring the lines between the physical, digital, and biological spheres.
The WEF lists aging populations, income inequality and a slowing of productivity as the major challenges to these changes. None of those is likely to change soon, and the aging population is a problem that cannot be solved for the time being.
Following the United States, Singapore and Switzerland at the top of the list are Japan, the Netherlands, the United Kingdom, Germany and Sweden.
Virtually undeveloped countries are at the bottom: Yemen, Chad, Sierra Leone, Burundi and Mozambique. No surprises there.