Singapore overtakes US as world’s most competitive economy
Singapore overtook the United States to become the world’s most competitive economy in 2019, according to the World Economic’s Forum (WEF) flagship Global Competitiveness Report released on Tuesday (Oct 8). The annual ranking of 141 economies measures competitiveness on a scale of zero to 100 based on factors that include infrastructure, health, the labour market, the financial system, quality of public institutions and economic openness. Singapore scored 84.8 out of 100. The US, which was last year’s most competitive economy, scored 83.7 to be ranked second. An improvement of 1.3 points in its overall score and a lower performance by the US propelled Singapore to the top spot this year, said the report. “Singapore improves from an already high base on 10 of the 12 pillars, and its score on every pillar is between 4 and 19 points higher than the OECD (Organisation for Economic Co-operation and Development) average,” it added.
Out of the index’s 12 assessment pillars, Singapore came in first in the areas of infrastructure (95.4), health (100) and labour markets (81.2). The country also garnered a high score in the areas of financial system (91.3) and macroeconomic stability (99.7). In terms of market efficiency, Singapore, being “the most open economy in the world”, scored 81.2 and was ranked second behind Hong Kong, according to the report. With a score of 80.4, Singapore also came in second for the assessment pillar on public institutions, which takes into account areas such as security, social capital, checks and balances, public sector performance and the incidence of corruption. “Singapore ranks second for the quality of public institutions, behind Finland, but its performance is undermined by limited checks and balances,” the report said.
“Singapore notably ranks 124th on the Freedom of the Press Index and lack of commitment to sustainability,” it added. Singapore scored between 71.5 and 87.1 for the remaining pillars on information and communication technology adoption, skills, product market, market size, business dynamism and innovation capability. Its lowest score was in the aspect of market size, which took into account the gross domestic product and imports of goods and services. Moving forward, the report said that Singapore will need to promote entrepreneurship and further improve its skills base so as to become a global innovation hub. Trade and Industry Minister Chan Chun Sing on Wednesday said the ranking was “encouraging news” as it reflects how Singapore’s strong fundamentals have continued to distinguish it from the competition. But as a small and open economy, Singapore cannot afford to take things for granted and it must persevere with collective efforts to stay ahead in light of current economic uncertainties, he added.
“We must continue to build on our strong fundamentals, improve the capabilities of our enterprises, transform our industries and ensure that our workers are well-equipped with the right skills to stay competitive,” Mr Chan wrote in a Facebook post.
HOW OTHER COUNTRIES FARED
The US slipped from a score of 85.6 last year to 83.7, with the slippage linked in part to President Donald Trump’s trade wars. While the report noted that the US “remains an innovation powerhouse” and the world’s second-most competitive economy, some trouble signs have emerged, WEF said. “Uncertainty among business leaders affects the performance of nine of the 12 pillars this year, yet some areas register a more noticeable drop compared to others,” the report said, citing lower scores in the areas of product market and human capital. “There are no two ways (about) it. It is important to ensure the countries are being open to trade,” said Saadia Zahidi, a WEF managing director, when asked to comment on the impact of the tariffs imposed by the Trump administration. She noted the lack of “hard data” on the impact of US tariffs imposed on several of its main economic partners, as the set of products impacted remains limited compared to overall trade. But the sentiment surrounding investing in the US “has been going down,” she told reporters in Geneva.
“That will end up impacting long-term investment; that will end up impacting how decision makers are thinking; that will end up impacting the view of non-American business leaders (of) the United States. So it does matter in the long term,” she added. Zahidi said that the US had also fallen in the rankings because healthy life expectancy in the country was now lower than in China. In data published last year, the World Health Organization said that a newborn in China could expect 68.7 years of healthy living, compared to 68.5 for American newborns. Rounding up the top five, Hong Kong rose four spots to claim third place with a score of 83.1. However, WEF said the data used in the report was collected before waves of protests began shaking the financial hub. The Netherlands finished fourth – up two slots from last year – while Switzerland came in fifth place. The WEF, which organises the annual gathering of business and political elite in Davos, has released this annual competitiveness report since 1979 that assesses which economies are well placed to see productivity and long-term growth.