The United Arab Emirates (UAE) leads the way among Arab countries in the World Economic Forum’s Global Competitiveness Report 2017-2018, published today. The country takes 17th position globally on the list.

For the ninth consecutive year, the report’s Global Competitiveness Index (GCI) finds Switzerland to be the world’s most competitive economy, narrowly ahead of the US and Singapore. Other economies in the top 10 are the Netherlands (4), Germany (5), Hong Kong (6), Seden (7), the United Kingdom (8), Japan (9) and Finland (10). China is the highest ranking among the BRICS group of large emerging markets, moving up one rank to 27.  

The Middle East and North Africa improves its average performance this year, despite further deterioration in the macroeconomic environment in some countries. Low oil and gas prices are forcing the region to implement reforms to boost diversification, and heavy investments in digital and technological infrastructure have allowed major improvements in technological readiness, the report said. However, these have not yet led to an equally large turnaround in the region’s level of innovation. Among the Arab states, Qatar takes the second postion (25th globally), followed by Saudi Arabia (30) and Bahrain (44). The most-improved country is Egypt (101st, up 14).

Ten years on from the global financial crisis, the prospects for a sustained economic recovery remain at risk due to a widespread failure on the part of leaders and policy-makers to put in place reforms necessary to underpin competitiveness and bring about much-needed increases in productivity, the report said.

The report is an annual assessment of the factors driving countries’ productivity and prosperity.

Drawing on data going back 10 years, the report highlights in particular three areas of greatest concern. These include the financial system, where levels of “soundness” have yet to recover from the shock of 2007 and in some parts of the world are declining further. This is especially of concern given the important role the financial system will need to play in facilitating investment in innovation related to the Fourth Industrial Revolution.

Another key finding is that competitiveness is enhanced, not weakened, by combining degrees of flexibility within the labour force with adequate protection of workers’ rights. With vast numbers of jobs set to be disrupted as a result of automation and robotization, creating conditions that can withstand economic shock and support workers through transition periods will be vital, it said.

GCI data also suggests that the reason innovation often fails to ignite productivity is due to an imbalance between investments in technology and efforts to promote its adoption throughout the wider economy.

“Global competitiveness will be more and more defined by the innovative capacity of a country. Talents will become increasingly more important than capital and therefore the world is moving from the age of capitalism into the age of talentism. Countries preparing for the Fourth Industrial Revolution and simultaneously strengthening their political, economic and social systems will be the winners in the competitive race of the future,” said Klaus Schwab, founder and executive chairman, World Economic Forum.

India (40th) remains the most competitive country in South Asia, as most countries in the region improve their performance. The two Himalayan countries of Bhutan (82nd, up 15) and Nepal (88th, up 10) are among the most improved countries globally while Pakistan (115th, up seven) and Bangladesh (99th, up seven) have both improved their scores across all pillars of competitiveness. Improving ICT infrastructure and use remain among the biggest challenges for the region: in the past decade, technological readiness stagnated the most in South Asia.

“Countries must establish an environment that enables citizens and businesses to create, develop and implement new ideas that will allow them to progress and grow. The Global Competitiveness Report helps us understand the drivers of innovation and growth and this edition comes at a time when increasing the ability of countries to adopt innovations is critical to achieving broad-based growth and economic progress,” said Xavier Sala-i-Martin, professor of economics at Columbia University. -TradeArabia News Service