Switzerland has come top for the first time in the 33-year history of IMD’s World Competitiveness Ranking, in a year that reflected the impact of the COVID-19 pandemic on economic competitiveness.
Sweden came second (up from 6th last year) with Denmark in third spot (2nd in 2020) in a shakeup that saw European economies weather the health crisis better than most other regions. Completing the top five were the Netherlands (also 4th last year) followed by Singapore. Singapore took a tumble from the number one spot it had held for the previous two years.
The IMD World Competitiveness Ranking ranks 64 economies and assesses the extent to which a country promotes the prosperity of its people by measuring economic well-being through hard data and survey responses from executives. This year the rankings expose the economic impact of the pandemic across the globe. The report finds that qualities such as investment in innovation, digitalisation, welfare benefits and leadership resulting in social cohesion have helped economies better weather the crisis, allowing them to rank higher in competitiveness.
One major trend revealed in this year’s results is that countries that had built themselves a certain economic buffer prior to the pandemic fared better, and that this was in spite of their infection levels.
Arturo Bris, Director of the IMD World Competitiveness Centre and Professor of Finance, noted that the health crisis – while devastating – was temporary. Competitiveness measures longer-term impact.
“Although Switzerland was slow to fight the pandemic, it has not jeopardized its future economic growth because it has kept a disciplined financial strategy by not spending too much.”
Economic prowess in spite of infection levels is also seen in the positions of the United States, which maintained its foothold in 10th place, and the United Kingdom, which shuffled up one spot to 18th.
Switzerland has been competing with Singapore in recent years but the latter has suffered significantly on an economic level during the pandemic, as it depends on the export and import of services and on people’s mobility, the report finds.
Switzerland enjoys the benefits of being a European country, but finds agility in its lack of European Union membership. Other European countries that topped the ranking found success by either being outside of the EU or at least of the eurozone, Bris noted. Independence and access to Europe during a period when global supply chains faced major risk was important, he said.
Europe’s triumph continues a trend first observed in last year’s ranking.
Overall, the IMD World Competitiveness Centre noted the following trends around the world: Innovation is the bedrock of long-term performance, with education and other factors driving both a productive workforce and research. (Switzerland, the Nordic economies, and Singapore take the top positions in this factor).
Digitally advanced economies that have seamlessly transitioned to “work-from-home” have thrived compared to their peers. (Singapore leads, followed by the Netherlands, Sweden, Finland, and USA).
The economies that provide Government Efficiency through a strong social safety net, including unemployment benefits, bounced back quicker.
Health Infrastructure also had an impact and is dominated by wealthy economies with a strong social net (Switzerland, the Nordic economies and Singapore take the top positions).