WEF On Competitiveness: Openness In Decline, Push In Innovation, Tech Needed

The world is seeing a decline in openness in economies, the World Economic Forum said in its new Global Competitiveness Report 2016 – 2017. But WEF sees an increased role for technology, innovation and business sophistication. And the most competitive nation in the world? Switzerland again.

The report is an annual assessment of the factors driving productivity and prosperity in 138 countries. Daniel Gómez Gaviria, Head of Competitiveness Research presented the 2016 – 2017 report, its main findings and key messages at a 27 September press conference at the Forum headquarters.

The full report, infographics, videos and more can be found here.
Switzerland ranks first again this year, followed by Singapore, the United States, the Netherlands and Germany. Japan places 8th and China 28th. India is the highest rising economy, climbing 16 places to 39th and Rwanda rose 6 places to 52nd, as one of the most improved nations in sub-Saharan Africa.

The Global Competitiveness Report ranks countries according to their competitiveness, which is based on the Global Competitiveness Index (GCI). The GCI is a measure of country-level data under 12 “pillars” or categories and competitiveness is defined as the set of institutions, policies and factors that determine productivity levels of a country.

“Productivity has been found to be the main determinant of future growth and income and ultimately has a huge impact on human flourishing and well-being.” explained Gómez. He added that in the long-term, the underlying factors and differences which explain divergent growth patterns are captured by the report.

There are 3 sub-indices upon which the GCI is based: basic requirements including, for example, institutions, infrastructure and health and primary education; efficiency enhancers such as goods market and labour market efficiency; and lastly business sophistication and innovation.

The movement and generation of ideas is more important than intellectual property or investment, Gómez said in the Q&A.

“Innovation growth is not only nor mainly about investment in fiscal capital, in patents or in R&D, but about movement and generation of ideas, and taking those ideas to market through new products and new business models,” he said. “The movement of persons is one such mechanism in which we can diversify the pool of ideas.”

The three key messages of this year’s report are that

• Monetary policy and stimulus measures are insufficient to sustain growth and constraints must be addressed along with competitiveness reforms taken.
• Technology, innovation and business sophistication increasingly play a role in driving development, particularly at the “dawn of the Fourth Industrial Revolution”. Countries should have a more holistic approach and really consider all 12 pillars, said Gómez.
• Gómez pointed to a particular strong correlation between openness and innovation. Openness refers to openness to trade, investment and to the flow of technology and ideas across borders. However, overall openness has been consistently declining, posing a threat to future growth and prosperity.

Klaus Schwab, founder and executive chairman of the World Economic Forum, warned in a statement that “Declining openness in the global economy is harming competitiveness and making it harder for leaders to drive sustainable, inclusive growth.” The press release on the report is available here.

Alexandra Nightingale is a researcher at Intellectual Property Watch. She completed her Bachelors in Law at the University of Sussex and holds an LLM degree in International Law from the School of Oriental and African Studies in London. During her Masters, she developed a strong interest in Intellectual Property, particularly patents and the aspects relating to global health. Her research interests now also include geographical indications and trademarks.