A detailed study of competitiveness in the global economy ranks the US top of the 140 countries included. The report suggests that few governments have begun to plan for the impact of the fourth industrial revolution.
The United States is the world's most competitive economy, according to a newly styled World Economic Forum (WEF) report on the global economy.
It finished just ahead of Singapore, Germany, Switzerland and Japan in the 140-country ranking, which was published on Wednesday.
The WEF's 'Global Competitiveness Index 4.0' is something of a departure from previous editions of the annual report, in that it has slightly changed its name and updated its methodology in order to — in the report's own words — reflect "the changing nature of economic competitiveness in a world that is becoming increasingly transformed by new, digital technologies".
Under the previous format, simply called the Global Competitiveness Index, the US was consistently in the top three but had not finished in top spot since 2008, with Switzerland topping the list for nine years in a row from 2008 to 2017.
However, the 2018 edition, using the new criteria, "backcast" data for 2017 and came up with new rankings for that year. In that updated list, the US finished top as well.
In addition to ranking countries, the report makes a number of general assessments regarding the overall competitiveness and health of the world economy. Its central finding is that the new wave of digital technologies creating fresh policy challenges for governments runs the risk of impacting global growth and productivity in the near future.
The report argues that many of the key factors that will drive future economic growth, such as idea generation, entrepreneurial culture, openness and agility, have not yet been the focus of major governmental policy making.
Heading for the competitiveness frontier
The report ranks countries across 98 detailed indicators, under 12 specific drivers of productivity spread across four main sections: the enabling environment around business, human capital, markets and the innovation ecosystem.
The highest mark possible is 100 points, an imaginary ideal "frontier" of economic competitiveness. The US scores 85.6 in total, ahead of Singapore (83.5), Germany (82.8), Switzerland (82.6), Japan (82.5), the Netherlands (82.4), Hong Kong (82.3), the UK (82.0), Sweden (81.7) and Denmark (80.6) in the top ten.
The United States' top ranking is built on what the WEF determines as its strong "business dynamism" pillar, particularly its vibrant entrepreneurial culture, strong labor market and financial system.
With its strong focus on the impact of the so-called fourth industrial revolution, the report assesses what it believes is the readiness of countries to handle future changes in the business landscape.
Singapore is the most "future-ready" economy, according to the report, while Sweden has the most digitally skilled workforce. Switzerland is ranked first in terms of the ability to reskill and retrain its workforce, while Germany is supposedly the best when it comes to mastering the innovation process in business.
Europe's largest economy finishes third overall, with its strongest results coming in the areas of macroeconomic stability, worker skills, business dynamism and innovation capability. It performs less well in the adoption of information and communication technologies (ICT), finishing 31st, while under worker health and financial systems, it ranks well below most of its rich-country peers.
Calling for openness and inclusion
"Embracing the Fourth Industrial Revolution has become a defining factor for competitiveness," Klaus Schwab, founder and executive chairman of the World Economic Forum, is quoted in the report.
"With this report, the World Economic Forum proposes an approach to assess how well countries are performing against this new criterion. I foresee a new global divide between countries who understand innovative transformations and those that don't. Only those economies that recognize the importance of the Fourth Industrial Revolution will be able to expand opportunities for their people."
The report also weighs in on the currently in-vogue topics of trade tensions and the ongoing backlash against globalization visited in several recent election results. The presidency of Donald Trump in the United States, as well as the UK's vote to leave the EU, has threatened to drastically alter the status quo in international trade in recent years.
The report emphasizes the importance of trade openness for global competitiveness, saying that the "data suggests that global economic health would be positively impacted by a return to greater openness and integration" whilst also cautioning that new policies are needed for those adversely affected by globalization.
The report also called on governments to implement more inclusive and redistributive tax policies, saying that "it is possible to be pro-growth and inclusive at the same time."
The WEF has been publishing global competitive reports since 1979, and according to its own mission, has been "providing policy-makers and other stakeholders around the world with an annual assessment of the drivers of long-term growth."