As the economies of the US and Europe recover, large emerging markets are unable to keep up on competitiveness, a preview of a yearly competiveness report by Switzerland-based global business school IMD states.
The IMD World Competitiveness Yearbook (WCY), which will be published at the end of June, benchmarks the performance of 60 countries based on over 300 criteria measuring different facets of competitiveness.
“The overall competitiveness story for 2014 is one of continued success in the US, partial recovery in Europe, and struggles for some large emerging markets,” said IMD World Competitiveness Center director Professor Arturo Bris.
Most of the larger emerging markets reported a slide in ranking as economic growth and foreign investment slow and infrastructure remained inadequate, while the previous top-ten countries mostly maintained their rankings – an indication, particularly in the US, which retained the top spot, of the resilience of the economy, better employment numbers and dominance in technology and infrastructure.
The WCY showed China slipping to a ranking of 23 on the back of concerns about its business environment, while inefficient labour markets and ineffective business management resulted in India and Brazil declining to rankings of 44 and 54 respectively.
High levels of poverty and inequality, compounded by a lack of job opportunities and a slowing economy, hampered South Africa’s competitiveness, which shifted up one spot from 53 in 2013, to the current ranking of 52.
Further, high rural-urban migration owing to urban-biased infrastructure development and a shortage of maths and science-orientated skills continued to weigh on the country’s competitiveness.
The report stated that South Africa’s business and government needed to narrow its focus to long-term investment initiatives to uplift the economy.
Russia moved up from a ranking of 42 last year to 38 in 2014.
Small economies such as Switzerland, which took second place, Singapore, with a ranking of three, and Hong Kong, in fourth place, continued to prosper owing to exports, business efficiency and innovation.
“Europe fared better than last year, thanks to its gradual economic recovery. Denmark (9) enters the top ten, joining Switzerland, Sweden (5), Germany (6) and Norway (10),” Bris added.
The IMD World Competitiveness Center also pointed out that, in line with the strong correlation between a country’s overall competitiveness ranking and its international image as a place to do business, seven of the top ten countries in the overall ranking for 2014 were also in the top ten for having an image abroad that encourages business development.