The Global Competitiveness Report’s competitiveness ranking is based on the Global Competitiveness Index (GCI), developed for the World Economic Forum by Sala-i-Martin The Global Competitiveness Index 2011-2012 Top 10and introduced in 2004. The GCI comprises 12 categories – the pillars of competitiveness – which together provide a comprehensive picture of a country’s competitiveness landscape. The pillars are: institutions, infrastructure, macroeconomic environment, health and primary education, higher education and training, goods market efficiency, labour market efficiency, financial market development, technological readiness, market size, business sophistication and innovation.

This year, over 14,000 business leaders were polled in a record 142 economies. The survey is designed to capture a broad range of factors affecting an economy’s business climate.

Switzerland tops the overall rankings. Singapore overtakes Sweden for second position. Northern and Western European countries dominate the top 10 with Sweden (3rd), Finland (4th), Germany (6th), the Netherlands (7th), Denmark (8th) and the United Kingdom (10th). Japan remains the second-ranked Asian economy at 9th place, despite falling three places since last year.

The United States continues its decline for the third year in a row, falling one more place to fifth position. Germany maintains a strong position within the Eurozone, although it goes down one position to sixth place, while the Netherlands (7th) improves by one position in the rankings, France drops three places to 18th, and Greece continues its downward trend to 90th.

The results show that while competitiveness in advanced economies has stagnated over the past seven years, in many emerging markets it has improved, placing their growth on a more stable footing and mirroring the shift in economic activity from advanced to emerging economies.

The People’s Republic of China (26th) continues to lead the way among large developing economies, improving by one more place and solidifying its position among the top 30. Among the four other BRICS economies, South Africa (50th) and Brazil (53rd) move upwards while India (56th) and Russia (66th) experience small declines. Several Asian economies perform strongly, with Japan (9th) and Hong Kong SAR (11th) also in the top 20.

On the US:

While many structural features continue to make its economy extremely productive, a number of escalating weaknesses have lowered the US ranking in recent years.  The business community continues to be critical toward public and private institutions (39th). In particular, its trust in politicians is not strong (50th), it remains concerned about the government’s ability to maintain arms-length relationships with the private sector (50th), and it considers that the government spends its resources relatively wastefully (66th). In comparison with last year, policymaking is assessed as less transparent (50th) and regulation as more burdensome (58th).
A lack of macroeconomic stability continues to be the United States’ greatest area of weakness (90th). Over the past decade, the country has been running repeated fiscal deficits, leading to burgeoning levels of public indebtedness that are likely to weigh heavily on the country’s future growth.

On Europe:

Despite these challenges, several European countries continue to feature prominently among the most competitive regions in the world. As described above, seven of them are among the top 10. In total, eleven are among the top 20, as follows: Switzerland (1st), Sweden (3rd), Finland (4th), Germany (6th), the Netherlands (7th), Denmark (8th), the United Kingdom (10th), Belgium (15th), Norway (16th), France (18th), and Austria (19th). However, Europe is also a region with significant disparities in competitiveness, with several countries from the region significantly lower in the rankings.

On Canada:

Canada has dropped two positions this year to 12th place, with a slight improvement in score. Canada continues to benefit from highly efficient markets (with its goods, labor, and financial markets ranked 12th, 5th, and 13th, respectively), well-functioning and transparent institutions (11th), and excellent infrastructure (11th). In addition, the country has been successful in nurturing its human resources: it is ranked 6th for health and primary education and 12th for higher education and training.

On China:

China continues its steady progression in the rankings, rising by one rank to 26th. Indeed, it has improved its score and rank each year since 2005. The world’s most populous country continues to lead the BRICS economies by a significant margin, with South Africa—second among the BRICS—placing 50th.24 China’s performance improves in most pillars of the GCI and is stable in the remaining ones.

As in previous years, its macroeconomic situation is again very favorable (10th), despite a prolonged episode of high inflation. China is one of the world’s least indebted countries, boasts a savings rate of some 53 percent of GDP, and runs only moderate budget deficits. These factors, combined with good economic prospects, contribute to an improvement of the quality of its sovereign debt far greater than that of the other BRICS. China also achieves relatively high standards in terms of health and basic education (32nd), with positive trends in health indicators and nearly universal access to primary education, which is well assessed in terms of quality.

Turning to the more sophisticated areas of competitiveness, China ranks high in business sophistication (37th) and innovation (29th), particularly when considering its level of development.

On a less positive note, a number of challenges persist in the areas of corruption and judicial independence within the institutions pillar (48th). Moreover, the sentiment among businesses is that the country has become less safe over the past three years, resulting in higher costs for protection against diverse forms of crime and violence. Finally, standards of business ethics (57th) and corporate accountability (66th) are below those found in a number of other economies. As in previous years, China’s fairly poor results in the financial market development and technological readiness pillars pull down the economy’s overall competitiveness performance. However, the country improves markedly in the first of these (48th, up nine spots), thanks to an increased availability and affordability of financial services and better access to credit. It also makes strides in the technological readiness pillar (77th, up one), largely because of double-digit growth in the penetration rates of Internet use and mobile telephony.


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