Smaller economies such as Singapore, Denmark and Switzerland lead IMD’s World Competitiveness Ranking for 2020, while the US and China struggle as their trade war makes its impact felt.
Singapore, Denmark, Switzerland, the Netherlands and Hong Kong rank as the five top economies in terms of competitiveness, according to the 2020 World Competitiveness Ranking produced by business school IMD.
Despite the differences that these economies have, they are all relatively small, which follows a trend of smaller players becoming more influential on the global stage.
Small and clever
Singapore, which was also the top country in the 2019 ranking, is driven by its solid economic performance, its role as an international trade hub, and its employment and labour market dynamics, among other factors.
Second-placed Denmark topped the category for efforts towards achieving the UN’s Sustainable Development Goals (SDGs).
“In terms of Denmark and Danish companies, their SDGs performance is due to several dimensions in which they excel, including prioritising the protection of the environment and implementing policies to minimise climate change; providing quality education; enforcing gender equality; and reducing inequality in general,” says senior economist at the IMD World Competitiveness Center Dr José Caballero.
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IMD has included SDGs as a new criteria in the ranking for the first time this year, in a bid to highlight the significance of accomplishing the goals.
The third-ranked country is Switzerland, which scores high in international trade, scientific infrastructure, as well as the health and educational sectors. International trade is also one of the areas in which the Netherlands, ranked fourth, excels, along with employment, the labour market and technological infrastructure.
Despite Hong Kong being among the top five most competitive economies, its fifth place ranking is a drop from second in the 2019 list, the result of the political and social unrest in the special administrative region over the past year.
The 2020 World Competitiveness Ranking took into consideration hard data from 2019 and survey responses from 63 countries in early 2020. This process saw two more smaller economies, Cyprus and Greece, climb the highest number of places in the ranking – 11 and nine positions, respectively – compared with the 2019 ranking.
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“Cyprus and Greece benefited from an improved economic performance mainly because of a strong showing [with regards to] international investment and employment,” says Caballero. “In addition, both countries are enjoying greater confidence of the business community when it comes to government efficiency in terms of public finance – for example, both countries registered a government budget surplus recently – and institutional measures such as the adaptability of government policy.”
Big guns misfire
On top of small economies performing well in the 2020 survey, IMD’s analysis found that the world’s largest economies, China and the US, have lost the most ground. This comes as trade wars between the two countries have impacted negatively on their economies.
Indeed, the US has fallen from third position in 2019 to tenth this year, while China fell by six places to 20th.