The global economy’s growth of 2.5% in 2015 was down considerably from the 4.4% growth in 2010. Economic expansion is determined by two components: population growth and labor productivity. An aging population may partially explain the slower worldwide economic growth, but it is the sluggish productivity growth across the globe that is largely to blame.
In its 2016 Global Competitiveness Report, the WEF ranked the productivity — or competitiveness — of 138 national economies around the globe. The international organization examined government regulations, legal institutions, market size, health outcomes, educational attainment, and a range of other factors. To identify the most competitive economies, 24/7 Wall St. reviewed data compiled in the report.
Economies around the world exist at varying stages of development, and benefit from different drivers of competition at each stage. Countries in the earlier stages of development are called factor-driven economies and are characterized by low GDP per capita and heavy reliance on extractive industries such as oil, gas, and mining. For factor-driven economies, basic requirements — such as infrastructure and the health and primary education of residents — factor more heavily into competitiveness than in more developed countries. Of the 10 least competitive countries, nine are factor-driven economies.
In innovation-driven economies, businesses usually have access to the most talented labor pools, developed financial markets, and the most advanced technology. In such economies, which are also characterized by high GDP per capita, companies must compete by increasing the sophistication of their business procedures. Therefore, innovation and sophistication factors — such as marketing tools and spending on research and development — factor more heavily into their competitiveness. All 10 of the most competitive countries are considered innovation-driven economies.
To identify the most and least competitive nations in the world, 24/7 Wall St. reviewed The Global Competitiveness Report 2016-2017 from the WEF. The report uses an index consisting of 114 indicators organized into 12 pillars assessing the productivity, or competitiveness, of 138 countries. All GDP figures, including debt as a percentage of GDP, were provided to the WEF by the International Monetary Fund. Population figures also came from the IMF, and the number of patent applications came from the Organization for Economic Co-operation and Development. All data, unless otherwise specified, are from the most recent year available.
These are the most (and least) competitive countries in the world.