Cape Town - The US has surrendered its status as the world’s most competitive economy after being overtaken by China Hong Kong and Switzerland, according to the World Competitive Rankings released on Monday.
The sheer power of the economy of the US is no longer sufficient to keep it at the top of the ranking, which it has led for the past three years, the IMD World Competitiveness Centre said in a statement.
The 2016 edition ranks China Hong Kong first, Switzerland second and the US third, with Singapore, Sweden, Denmark, Ireland, the Netherlands, Norway and Canada completing the top ten.
South Africa, although strengthening its position by one place to #52, still ranked in the bottom ten of the 61 countries ranked. South Africa is the only African country that made it into the rankings.
Also in the bottom ten are four Latin American countries, notably Brazil and Venezuela which are facing similar challenges as South Africa.
The annual World Competitive Rankings, now in its 27th year, is widely regarded as the foremost annual assessment of the competitiveness of countries.
Each ranking is based on analysis of over 340 criteria derived from four principal factors: economic performance, government efficiency, business efficiency and infrastructure.
Responses from an in-depth survey of more than 5 400 business executives, who are asked to assess the situation in their own countries, are also taken into consideration.
Professor Arturo Bris, Director of the IMD World Competitiveness Centre, said a consistent commitment to a favourable business environment was central to China Hong Kong’s rise and that Switzerland’s small size and its emphasis on a commitment to quality have allowed it to react quickly to keep its economy on top.
The US still boasts the best economic performance in the world, but there are many other factors that were taken into account when assessing competitiveness, he said.
Bris said the common pattern among all of the countries in the top 20 is their focus on business-friendly regulation, physical and intangible infrastructure and inclusive institutions.
“One important fact that the ranking makes clear year after year is that current economic growth is by no means a guarantee of future competitiveness," he said.
Source: IMD World Competitiveness CentreThe data also showed that the rich are getting richer and the poor poorer.
“Since 1995 the world has become increasingly unequal in terms of income differences among countries, although the rate of increase is now slowing,” Bris said.
“The wealth of the richest countries has grown every year except for the past two, while the poorer countries have seen some improvement in living conditions since the millennium.
“Unfortunately, the problem for many countries is that wealth accumulation by the rich doesn’t yield any benefits for the poor in the absence of proper social safety nets."
Bris said innovation-driven economic growth in poorer countries improves competitiveness, but it also increases inequality.