The Global Competitiveness Report 2014-2015: Implications for Namibia

Mihe Gaomab II writes: The report produced by the World Economic Forum assesses the competitiveness landscape of 144 economies, providing insight into the drivers of their productivity and prosperity. Competitiveness is defined as the set of institutions, policies and factors that determine the level of productivity of a country. The level of productivity, in turn, sets the level of prosperity that can be earned by an economy. The different aspects of competitiveness are captured in 12 pillars, which compose the Global Competitiveness Index. This 35th edition emphasises innovation and skills as the key drivers of economic growth. While these increasingly influence competitiveness and the global economy tentatively recovers from the economic crisis, significant risks remain, resulting from a strained geopolitical situation, rising income inequality and the potential tightening of financial conditions. It is therefore crucial to address these structural challenges to ensure more sustainable and inclusive growth. More than ever, cooperative leadership among business, government and civil society is needed to re-establish sustainable growth and raise living standards throughout the world. Small States Top the List For the sixth consecutive year Switzerland leads the top 10, and again this year Singapore ranks as the second most competitive economy in the world. Overall, the rankings at the top have remained rather stable, although it is worth noting the significant progress made by the United States, which climbs to third place this year, and Japan, which rises three ranks to sixth position. Switzerland tops the performance and remarkably consistent across the board: the country ranks in the top 10 of eight pillars. Switzerland’s top- notch academic institutions, high spending on R&D, and strong cooperation between the academic and business worlds contribute to making it a top innovator. Switzerland boasts the highest number of Patent Cooperation Treaty applications per capita in the world. The sophistication of companies that operate at the highest end of the value chain constitutes another notable strength (second). Productivity is further enhanced by an excellent education system and a business sector that offers excellent on-the-job-training opportunities. The labour market balances employee protection with flexibility and the country’s business needs (first). Public institutions are among the most effective and transparent in the world (seventh), ensuring a level playing field and enhancing business confidence. Competitiveness is also buttressed by excellent infrastructure and connectivity (fifth) and highly developed financial markets (11th). Finally, Switzerland’s macroeconomic environment is among the most stable in the world (12th) at a time when many European countries continue to struggle in this area. A potential threat to Switzerland’s competitive edge might be the increasing difficulties faced by businesses and research institutions in finding the talent they need to preserve their outstanding capacity to innovate. Since 2012, the country has dropped from 14th to 24th on the indicator measuring the availability of engineers and scientists, Singapore ranks second overall for the fourth consecutive year, owing to an outstanding and stable performance across all the dimensions of the GCI. Again this year, Singapore is the only economy to feature in the top three in seven out of the 12 pillars; it also appears in the top 10 of two other pillars. Singapore tops the goods market efficiency pillar and places second in the labour market efficiency and financial market development pillars. Furthermore, the city-state boasts one of the world’s best institutional frameworks and Singapore possesses world-class infrastructure (second), with excellent roads, ports, and air transport facilities. Its economy can also rely on a sound macroeconomic environment and fiscal management (15th)—its budget surplus amounted to 6.9% of GDP in 2013. Singapore’s competitiveness is further enhanced by its strong focus on education and training pillar, where it comes in second. Singapore’s private sector is also fairly sophisticated (19th) and becoming more innovative (9th), although room for improvement exists in both areas, especially as these are the keys to Singapore’s future prosperity. (To be continued tomorrow.) * Mihe Gaomab II is the Chief Executive Officer of the Namibian Competition Commission.