The United States has regained the title of the world’s most economically competitive nation, the latest global rankings publication by Swiss business school IMD show. The United Arab Emirates made the greatest improvement of any country, rising eight places to reach the top ten.
Evaluating 60 countries from analyses of 130 hard and 116 survey-based data for each nation, the IMD 2013 World Competitiveness Yearbook (WCY), released today, shows the US rising to the top after being overtaken by Hong Kong in 2012. The latter drops to third, with Switzerland, Sweden, and Singapore making up the top five.
The UAE and Qatar appear in positions eight and ten as best-ranked countries from the Middle East and North Africa region, with the UAE’s gain of eight positions allowing it to push ahead of unchanged Qatar. The UAE, which were first covered in the 2011 WCY, has advanced by 20 ranking positions in the past two years, more than any other country.
IMD attributes the return of the US to the top to a “rebounding financial sector, an abundance of technological innovation and successful companies.” A look at the US country profile reveals that the country has leapt higher in business efficiency but dropped in government efficiency – with relations between rival Democrat and Republican politicians reaching new lows in recent months.
Taking austerity lightly
In interpreting the trends of the study, Professor Stephane Garelli, director of the IMD World Competitiveness Center, emphasizes the role of social cohesion for competitiveness and warned against taking austerity too far. “The robust comeback of the US to the top of the competitiveness rankings, and better news from Japan, have revived the austerity debate,” he said. In his view, structural reforms are unavoidable but growth is the inescapable prerequisite for competitiveness, cautioning that “the harshness of austerity measures too often antagonizes the population. In the end, countries need to preserve social cohesion to deliver prosperity.”
UAE follows the USA
While they are very different animals, the US and the UAE share one characteristic in the perceptions of respective local business leaders: both countries impress most by their economic “can do” energy. Of 15 parameters in the survey, “dynamism of the economy” was named most often as an attractive factor in both countries, by 57.4 percent of American executives and by 38.8 percent of their peers in the UAE.
Business leaders in competitive European countries such as Switzerland and Germany chose the top attractiveness points of their economies rather differently, as “policy stability and predictability” in the former and “skilled workforce” in the latter.
Whether or not one sees these opinions as indication that stereotypes also exist among business leaders, it is instructive to contrast most-picked attractiveness indicators with the least-picked in a country. In the US, only 5.9 percent of business leaders believe their country to have a competitive advantage in a “favorable tax regime” whereas 30.6 percent of Emiratis say they do. A high education standard in their country, on the other hand, is not an attractiveness indicator for any business leaders in the UAE, unlike in the US (30.7 percent), the United Kingdom (38.9 percent), Switzerland (53.9 percent), Germany (55.5 percent) and South Korea where “high educational level” was the top attractiveness point and selected by 77.9 percent of respondents.
Compare and contrast
It is quite enticing to compare the WCY with the Global Competitiveness Report (GCR) published annually by the World Economic Forum. While a director of the World Economic Forum (WEF) in charge of the GCR told Executive recently that there is not much competition between the two providers, this seems implausible.
Discrepancies between WCY and GCR are not only noticeable but sometimes significant, such as in the case of Finland which was ranked it the top 3 percent (third out of 144) by WEF but barely made the top third (20 out of 60) at IMD. Qatar looks almost twice as good with WEF (top Arab country and 11th of 144 overall) than with IMD (10th of 60); inversely, WEF has the United Arab Emirates in a good position (24) but not quite as high as it sees Qatar.
Some of these discrepancies may be traceable to the differences in methodology – IMD emphasizes hard data in assigning its rankings and the WEF directs more attention to the perceptions of business leaders surveyed.