Japan overtakes Hong Kong in competitiveness rankings

PUBLISHED : Wednesday, 03 September, 2014, 10:43am
UPDATED : Wednesday, 03 September, 2014, 10:43am

The beleaguered Japanese economy overtook Hong Kong to rank sixth on the World Economic Forum’s list of the most competitive economies, released on Wednesday.

Hong Kong stayed in seventh place, while Japan jumped three spots from ninth last year.

Switzerland again topped the table, followed by Singapore, while the United States, fifth last year, leapfrogged into third place, leaving Finland and Germany in its wake.

The Global Competitiveness Report published by the Geneva-based body, which is most famous for gathering politicians and billionaires for an annual exchange of views at the Swiss resort of Davos, showed the same countries filling the top 10 spots for at least the third year running.

Switzerland’s slick efficiency, innovation and macroeconomic stability kept it on top for the sixth consecutive year, although it was marked down for the difficulty of finding qualified workers.

“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,” the report said.

Mainland China climbed one position to 28th, Russia jumped 11 to 53rd spot and India slid 11 to 71st, becoming the least competitive BRIC economy, 14 places behind Brazil.

European Union states such as Romania, Portugal and Latvia were among those that rose up the ranks of competitiveness. Greece, which still brings up the rear for the EU, in 81st place globally, jumped 10 places up the rankings from 91st last year.

Greece was helped by improvements in its goods and labour markets and a sharply reduced budget deficit, which improved the outlook despite still very high levels of government debt.

“All this suggests that the implemented reforms are starting to pay off,” the report said.

Bottom-ranked this year was Guinea, lately in the news for being the source of the world’s most deadly Ebola outbreak.

A potential threat to Switzerland might be the increasing difficulties faced by businesses and research institutions in finding the talent
World Economic Forum report

The WEF bases its assessment on a dozen drivers of competitiveness, including institutions, infrastructure, health and education, market size and the macroeconomic environment. The report also factors in a survey of business leaders assessing government efficiency and transparency.

India has been sliding down the rankings since 2009, let down by basic health care and education, red tape, high business taxes, poor technology and a rigid labour market.

Russia’s new-found competitive edge was sharpened by improvements to domestic competition and business sophistication that came before the Ukraine conflict.

Reverberations from that conflict – sanctions and the impact on the gas trade, with knock-on effects on public funding – could blunt it again, the survey said.

A major brake on competitiveness for many advanced economies, including the US, Japan and many EU countries, was doubt about their macroeconomic environments.

In that category, the US was ranked 113th worldwide, slightly better than 117th last year.

The leaders in macroeconomic stability were Norway and Qatar, both blessed with energy bonanzas that have pushed gross domestic product above US$100,000 per head.