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International Internet Magazine. Baltic States news & analytics Thursday, 06.10.2022, 10:24

IMD: Singapore was number one for the second year in a row; Estonia is ranked 28st in the World Competitiveness Ranking

BC, Riga, 16.06.2020.Print version
Estonia jumped considerably in global competitiveness ranking this year. Estonia rose by 7 notches to 28th position this year. Lithuania drops to 31st place in the ranking. Latvia inched down by one notch to the 41st position, and Poland came in 39th, from 38th last year.

Singapore was number one for the second year in a row. In second to fifth place, in order, came: Denmark, Switzerland, the Netherlands and Hong Kong SAR. A marked pattern in this year’s results, which are an amalgam of hard data taken from 2019 and survey responses from early 2020, is the strength of smaller economies.

Arturo Bris, Director of the IMD World Competitiveness Center and Professor of Finance, says, The benefit of small economies in the current crisis comes from their ability to fight a pandemic and from their economic competitiveness. In part these may be fed by the fact it is easy to find social consensus.”

The top three’s different recipes for success

Factors behind Singapore’s success are its strong economic performance which stems from robust international trade and investment, employment and labor market measures.

Stable performances in both its education system and technological infrastructure – telecommunications, internet bandwidth speed and high-tech exports – also play key roles.

Denmark, in 2nd, can credit a strong economy, labor market, and health and education systems. In addition, the country performs very well in international investment and productivity, and topped Europe in business efficiency.

Switzerland has been gradually edging towards a podium position, from 5th to 4th and now 3rd in 2020. Robust international trade fuels its strong economic performance, whilst its scientific infrastructure and health and education systems show steadfast displays.

The number of small economies – broadly defined as such by their GDP –  in the top ten is striking. However, this is not to say that we are seeing a triumph of democracies. Singapore, Hong Kong and the UAE remain in the top ten, whilst some democracies (such as Argentina) sit at the bottom of the scale.

This year, new criteria were added to reflect the importance of achieving the UN Sustainable Development Goals. The criteria provide a perception of where the economy stands with respect to different sustainable goals that need to be satisfied in 10 years, such as education and the environment, inclusion and empowerment, ageing and health.

Setbacks for some

For the second year in a row, the USA failed to fight back having been toppled from its number one spot last year by Singapore, and coming in at 10th (3rd in 2019). Trade wars have damaged both China and the USA’s economies, reversing their positive growth trajectories. China this year dropped to 20th position from 14th last year.

While Hong Kong SAR came in at 5ththis is a far cry from 2nd which it enjoyed last year. The decline can be attributed to a decline in its economic performance, social turmoil in Hong Kong as well as the rub-on effect of the Chinese economy. However, the 2020 rankings do not pick up on events in from the last couple of months.

The UAE also falls from 5th to 9th. The Middle East struggled as a region, reflecting the oil crisis.

Lithuania drops to 31st place in global competitiveness ranking

Lithuania has dropped two notched to the 31st place in the IMD World Competitiveness ranking this year, compared to last year, overtaking Estonia which jumped considerably in the ranking this year.

Lithuania significantly improved its position in the economic development area but performed worse in terms of business efficiency, according to Lithuania's exports promoting agency Versli Lietuva (Enterprise Lithuania).

"Lithuania, as a small economy, has the quality of reflecting the real situation fast, and it's not as inert as other major countries in the world. Therefore, the results of this rating fairly accurately indicate the competitiveness situation, and the tendencies of our country is reflected in the analysis of the long-term positions in the rating," Vadimas Ivanovas of Versli Lietuva said.

The IMD World Competitiveness Rankings, established in 1989, incorporate 235 indicators from each of the 63 ranked economies. The ranking takes into account a wide range of “hard” statistics such as unemployment, GDP and government spending on health and education, as well as “soft” data from an Executive Opinion Survey covering topics such as social cohesion, globalization and corruption.

This information feeds into four categories – economic performance, infrastructure, government efficiency and business efficiency – to give a final score for each country. There is no one-size-fits-all solution for competitiveness, but the best performing countries tend to score well across all four categories.

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