The global economy is not prepared for the change brought by technological disruption. This is what a major update of the World Competitiveness Index published annually by the World Economic Forum (WEF) reveals.
The WEF warns that while the United States is the country closest to the “competitive frontier,” government policies need to catch up to prevent rapid technological changes represent an obstacle to competitiveness. More than three-quarters of economies lack sufficient capacity for innovation, an issue that, according to the study, has repercussions on economic competitiveness.
The annual index, released on Wednesday (17.10.2018), assesses the national competitiveness of 140 economies. And it does so through the factors that determine the level of productivity of an economy: its institutions, infrastructure and business dynamism, among others.
New competitiveness index
The WEF has renewed the competitiveness index. This reform aims to reflect the changing nature of economic competitiveness in the era of rapid innovation and digital technologies, which define the fourth industrial revolutionThe forum argues that these challenges risk negatively impacting future growth and productivity.
These factors include competitiveness.: idea generation, entrepreneurial culture, openness and agility. By redefining the way people work, live and interact, the fourth industrial revolution is disrupting economies and societies. According to the WEF, this offers the possibility of leapfrogging development, but it also makes the path to development less certain.
Openness and inclusion
In the wake of rising trade tensions, WEF calls on governments to resist protectionist measures driven by short-term interests and instead calls for greater openness to foster competitiveness and long-term growth. The report states that “the pursuit of national competitiveness does not undermine international cooperation; in fact, openness contributes to competitiveness.”
The findings also make a strong case for policies such as safety nets and progressive taxation to improve the conditions of people who have been negatively impacted by globalization. While technology has the capacity to improve development, Saadia Zahidi, board member and director of the WEF's Center for New Economy and Society, noted in a press release that "it is not a magic bullet, on its own. Countries must invest in people and institutions to deliver the promised technology.
4.0 Index
The Competitiveness Index – in its fourth major revision since it was created in 1979 – reflects a new understanding of competitiveness in the era of rapid and transformative innovation.
Around 60% of this year's 98 indicators are new to incorporate the preparedness of economies to face the challenges of the future. Among others, social capital, funds for disruptive businesses, and the use of the Internet have been included. The index (with a scale, for each indicator, from 0 to 100) shows how close the economy is to the ideal state or the “frontier” of competitiveness.
Argentina
Argentina ranks 81st overall. The country’s competitiveness score is 57.5, ranking it 11th among Latin American and Caribbean economies. The overall score is driven primarily by its human capital factors in Health and Skills. The country also scores its best in market size with a ranking of 34th overall, and third in the region with a score of 68,8.
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