Friday 28 October 2016

Ireland is world's 24th most competitive economy - World Economic Forum

Published 30/09/2015 | 14:10

Finance minister, Michael Noonan
Finance minister, Michael Noonan

Ireland has moved up one place in the World Economic Forum’s (WEF) competitiveness, edging ahead of Saudi Arabia to 24th place.

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Ireland ranked ahead of China but well behind our key competitors including the UK - which moved into the top 10 in the latest assessment. 

Despite a surging home currency Switzerland topped the table for the seventh consecutive year, with Singapore and the US second and third.

“Nurturing innovation and talent” has kept those three nations on top, according to a report on 140 countries published Wednesday by the Geneva-based WEF. “In many countries, too few people have access to high-quality education and training, and labor markets are not flexible enough.”

The WEF, best known for its annual conference in Davos, defines competitiveness as the set of institutions, policies and factors that determine a country’s level of productivity. A nation’s ranking depends on 12 indicators, including infrastructure, macroeconomic environment and technological readiness.

While Ireland’s scores across a range of areas were generally good - including the efficiency of markets, health and primary education, but the overall ranking was dragged down by the macroeconomic situation, financial markets development and the size of the market. 

Unsurprisingly, developed markets with strong institutions and good infrastructure dominate the rankings.

Emerging markets have failed to improve their competitiveness since the global financial crisis, according to the forum, which cut Brazil’s ranking by 18 places to 75th and has Turkey dropping six to 51st. While India rebounded to 55th after five years of decline, China’s failure to improve on its 28th spot shows the challenges it faces in “transitioning its economy,” the WEF said.

“The new normal of slow productivity growth poses a grave threat to the global economy and seriously impacts the world’s ability to tackle key challenges such as unemployment and income inequality,” Xavier Sala-i-Martin, a professor of economics at Columbia University, said in a statement issued by the WEF. “The best way to address this is for leaders to prioritize reform and investment in areas such as innovation and labor markets.”

The ranking of the US, commended for its sophisticated businesses and collaboration between companies and universities, may be threatened if it doesn’t reform education and address high health and social security costs to boost productivity, according to the report.

The appreciation of the Swiss franc since the removal in January of a cap against the euro, near-zero inflation and negative interest rates pose risks for Switzerland, the WEF said. A 2014 Germany and the Netherlands moved up the ranking to fourth and fifth respectively, while Finland fell to eighth. The U.K. slipped one notch to 10th, swapping places with Sweden.

Last placed Guinea was one of six African nations at the bottom of the ranking. South Africa climbed seven places to 49th, boosted by innovation and technology.

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