IMD World Competitiveness Booklet 2021

IMD World Competiveness Center

IMD WORLD COMPETITIVENESS BOOKLET

2021

IMDWorld Competitiveness Booklet

IMD WORLD COMPETITIVENESS BOOKLET 2021

June 2021 IMD WORLD COMPETITIVENESS BOOKLET 2021

ISBN-13 978-2-940485-39-0 ISSN 1026-2628

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+41 21 618 02 51 wccinfo@imd.org www.imd.org/wcc

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Table of Contents

Preface................................................................................................................ 4 The IMD World Competitiveness Center. ........................................................... 5 Partner Institutes................................................................................................. 6 Competitiveness under duress: Global trends in the COVID era...................... 16 Rankings in a nutshell....................................................................................... 29 The 2021 IMD World Competitiveness Ranking....................................... 30 Methodology in a Nutshell. ....................................................................... 32 What is the IMD World Competitiveness Ranking?.................................. 33 Computing the Rankings. ......................................................................... 33 Selected Breakdowns............................................................................... 34 Competitiveness country profiles...................................................................... 51 Statistical tables.............................................................................................. 117 Economic Performance. ......................................................................... 118 Government Efficiency............................................................................ 120 Business Efficiency................................................................................. 122 Infrastructure........................................................................................... 124

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Preface

In the pages of this publication a year ago, we were outlining the beginning of what seemed to be a health and economic crisis. We were speaking about the pandemic that was on our doorsteps while political leaders worldwide used different strategies to contain the infections and protect the citizens of their countries. Here we are, a year later, and COVID remains one of the most important challenges for the world economy according to most surveyed executives in highly competitive economies. This highlights the underlying finding that economies that performed well in the ‘first’ wave of the pandemic found themselves in challenging times in the ‘second’ or ‘third’ waves. We are pleased and proud to present the IMD World Competitiveness Yearbook 2021 . The IMD World Competitiveness Center team is dedicated to assessing how economies fared in generating long-term value for their citizens. This year we have the pleasure of welcoming a new economy in the group of countries we study, Botswana, increasing the total number to 64. The 33 rd edition of this publication is launched at a most critical moment for the whole world. The presence of the pandemic challenged all the economies on how to cope with the consequences of COVID. The results show that the agility of an economy, its access to a diversified portfolio of goods produced and trade partners, and its capacity to support its citizens to face the pandemic, have been essential for navigating the crisis. We know how privileged we are to enjoy the support of a substantial group of stakeholders. Our Partner Institutes coordinate part of the demanding task to gather and validate the necessary data employed; The IMD Alumni community and our Panel of Experts from all the countries who respond to our questionnaire; The IMD faculty and staff that support us, and provide feedback. We are fortunate and honored for their continuous collaboration. This year, once again, they managed to make us feel that it was business as usual and not a uniquely complicated, and difficult environment working remotely to create the Yearbook. The reason you have this publication in your hands now is, for a great part, because of our stakeholders. We are grateful!

Professor Arturo Bris Director

Dr Christos Cabolis Chief Economist & Head of Operations

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IMD WORLD COMPETITIVENESS BOOKLET 2021

The IMD World Competitiveness Center For more than thirty years, the IMD World Competitiveness Center has pioneered research on how countries and companies compete to lay the foundations for sustainable value creation. The competitiveness of nations is probably one of the most significant developments in modern management and IMD is committed to leading the field. The World Competitiveness Center conducts its mission in cooperation with a network of 58 Partner Institutes worldwide to provide the government, business and academic communities with the following services:

• Competitiveness Special Reports • Competitiveness Prognostic Reports • Workshops/Mega Dives on competitiveness • IMD World Competitiveness Yearbook • IMD World Digital Competitiveness Ranking • IMD World Talent Ranking

The IMD World Competitiveness Center team:

At IMD Professor Arturo Bris Christos Cabolis José Caballero Madeleine Hediger Catherine Jobin William Milner

Director

Chief Economist & Head of Operations

Senior Economist

Data Research and Online Services Specialist Order and Sales Administrator Research Projects Associate Manager

Marco Pistis Maryam Zargari

Research Specialist

Research Specialist At KAESCO Consulting Jean-François Kaeser

We also have the privilege of collaborating with a unique network of Partner Institutes, and other organizations, which guarantees the relevance of the data gathered.

Contact: Tel :

+41 21 618 02 51 e-mail : wccinfo@imd.org Internet: www.imd.org/wcc

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IMD WORLD COMPETITIVENESS BOOKLET 2021

Partner Institutes

We would like to express our deep appreciation for the contribution of our Partner Institutes, enabling an extensive coverage of competitiveness in their home countries. The following Institutes and people supplied data from national sources and helped distribute the survey questionnaires:

Argentina Research Program on Economic

Dr. Alicia Caballero, Dean Dr. Marcelo F. Resico, Senior Economist Mrs. Martina S. Rosenfeld, Research Assistant

Development and Institutions Faculty of Economic Sciences Catholic University of Argentina, Buenos Aires http://www.uca.edu.ar Australia CEDA – Committee for Economic Development of Australia www.ceda.com.au Austria Federation of Austrian Industries, Vienna Austrian Institute of Economic Research, Vienna http://www.iv-net.at Belgium FEB - Federation of Enterprises in Belgium, Brussels www.feb.be Botswana BNPC - Botswana National Productivity Centre www.bnpc.bw Brazil Fundação Dom Cabral, Innovation and Entrepreneurship Center https://www.fdc.org.br/

Melissa Wilson, Senior Economist Roxanne Punton, Director, Communications

Dr. Christian Helmenstein, Chief Economist Ms. Helena Zwickl Mr. Michael Oliver

Anouar Boukamel, Attaché Centre de compétence Economie & Conjoncture

Letsogile Batsetswe, Research Consultant Christopher M. Diswai, Executive Director

Carlos Arruda, Professor and Director FDC Innovation and Entrepreneurship Center Ana Burcharth, Professor Naira T. A. C. Gonçalves, Researcher

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IMD WORLD COMPETITIVENESS BOOKLET 2021

Bulgaria Center for the Study of Democracy, Sofia www.csd.bg

Mr. Ruslan Stefanov, Director, Economic Program Ms. Daniela Mineva, Research Fellow, Economic Program Mr. Martin Vladimirov, Analyst, Economic Program Dr. Todor Galev, Senior Analyst, Economic Program Blagovesta Dzhabirova Lyubomir Levicharov

Bulgarian Chamber of Commerce and Industry Economic Analysis and Policy Department https://www.bcci.bg/en.html

Canada Information and Communications Technology Council (ICTC) www.ictc-ctic.ca

Alexandra Cutean, Senior Director of Research & Policy Rosina Hamoni, Research Analyst

Chile Universidad de Chile Facultad de Economía y Negocios (FEN) www.fen.uchile.cl China China Institute for Development Planning, Tsinghua University

Dr. Enrique Manzur, Vice Dean Dr. Sergio Olavarrieta, Ph.D Program Director Dr. Pedro Hidalgo, Department Head

Prof. Yang Yongheng, Executive Associate Director of China Institute for Development Planning, Tsinghua University Prof. Wang Youqiang, Associate Director of China Institute for Development Planning, Tsinghua University Dr. Gong Pu, Research Assistant Professor, Tsinghua University Mr. Wang Hongshuai, PhD Candidate, Tsinghua University Ms. Song Wenjuan, PhD Candidate, Tsinghua University Ms. Zhang Ruijun, PhD Candidate, Tsinghua University Mr. Wang Jiancheng, PhD Candidate, Tsinghua University Ms. Jiang Xueying, PhD Candidate, Tsinghua University Mr. You Shuai, PhD Candidate, Tsinghua University Ms. Sun Xiao, Graduate Student, Tsinghua University Ms. Zhu Yichen, Graduate Student, Tsinghua University Ms. Huang Suyuan, Research Assistant Ms. Deng Yaxi, Research Assistant

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IMD WORLD COMPETITIVENESS BOOKLET 2021

Colombia National Planning Department https://www.dnp.gov.co

Luis Alberto Rodríguez, Director, National Department of Planning Juan Sebastián Robledo Botero, Director, Innovation and Private Sector Development

Croatia National Competitiveness Council http://konkurentnost.hr/en/

Ivica Mudrinic, President Jadranka Gable, Advisor Iva Tomic, PhD, Chief Economist

Cyprus Economics Research Centre, University of Cyprus http://ucy.ac.cy/erc/en/ Cyprus Employers and Industrialists Federation (OEB) www.oeb.org.cy Czech Republic Consumer Forum (Spotřebitelské fórum) www.spotrebitelskeforum.cz Denmark Confederation of Danish Industry https://www.danskindustri.dk/english/ Estonia Estonian Institute of Economic Research (EKI) www.ki.ee Enterprise Estonia (EAS)

Sofronis Clerides, Professor of Economics Nicoletta Pashourtidou, Assistant Director Antonis Frangoudis

Dr. Kryštof Kruliš

Allan Sørensen, Chief Economist

Ms. Marje Josing, Director

Mr. Tarmo Puolokainen, Head of Analysis

Finland ETLA Economic Research www.etla.fi France Business France, Paris http://en.businessfrance.fr/

Ville Kaitila, Researcher Markku Lehmus, Head of Forecasting Aki Kangasharju, Managing Director

Ms. Sylvie Montout, Chief Economist Louise Cassagnes, Economist

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IMD WORLD COMPETITIVENESS BOOKLET 2021

Greece Federation of Industries of Greece (SBE), Thessaloniki

Dr. Christos Georgiou, Director, Research and Documentation Department Mr. Constantinos Styliaras, Economist, Research and Documentation Department Aggelos Tsakanikas, Associate Professor National Technical University of Athens - Head of Entrepreneurship Observatory Sophia Stavraki, Research Associate

Foundation for Economic and Industrial Research (FEIR/IOBE), Athens

Hong Kong SAR Hong Kong Trade Development Council www.hktdc.com

Ms. Alice Tsang, Assistant Principal Economist Ms. Samantha Yim, Economist

Hungary ICEG European Center, Budapest http://icegec.org

Ms. Renata Anna Jaksa, Director Dr. Oliver Kovacs, Senior Research Fellow Prof. Dr. Magdolna Csath, Research Professor in Competitiveness

National University of Public Service, Competitiveness and Fiscal Stability Research Group, Budapest - http://en.uni- nke.hu/ Iceland Icelandic Chamber of Commerce, Reykjavik www.chamber.is India National Productivity Council, New Delhi www.npcindia.gov.in

Mr. Konrad S. Gudjonsson, Chief Economist Sverrir Bartolozzi, Economic Analyst

Dr. K.P. Sunny, Director & Head (Economic Services) Mr. Rajesh Sund, Director (Economic Services) & Head (Productivity Awareness) Dr. Rajat Sharma, Director (Economic Services)

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IMD WORLD COMPETITIVENESS BOOKLET 2021

Indonesia Lembaga Management, Faculty of Economics and Business, Universitas Indonesia (LM FEB UI), Jakarta http://www.lmfeui.com/index.php

Dr. Willem A. Makaliwe, Managing Director Dr. Toto Pranoto, Senior Adviser Mr. Bayuadi Wibowo, Group Head Research Services Mr. Arza Faldy Prameswara, Senior Researcher Mr. Taufiq Nur, Senior Researcher Ms. Helwa Salsabila, Research Analyst Mr. Yendra Emirsyah Kivatra, Research Analyst Ms. Tini Moeis, Managing Director Devi RD Hamdani, Senior Business Manager

NuPMK Consullting, Jakarta http://nupmk.co.id

Ireland IDA Ireland www.idaireland.com

Karen Law

Israel The Federation of Israeli Chambers of

Israela Many – Deputy Managing Director of Economy and Tax Liran Avitan, Economist

Commerce, Tel-Aviv www.chamber.org.il

Italy Promos Italia www.promositalia.camcom.it

Mr. Marco Fedato, Head of Investment Promotion

Japan Mitsubishi Research Institute, Inc., Tokyo Research Center for Policy and Economy www.mri.co.jp Jordan Ministry of Planning and International Cooperation www.mop.gov.jo

Dr. Hirotsugu Sakai, Research Director

Dr. Hadram Al-Fayes, Policies and Studies Director Ghada Issa, Head of Competitiveness Division

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IMD WORLD COMPETITIVENESS BOOKLET 2021

Kazakhstan Economic Research Institute, JSC of the Ministry of National Economy of the Republic of Kazakhstan, Nur-Sultan www.economy.kz

Ruslan Sultanov, Chairman of the Board Dias Sembayev, Deputy Chairman of the Board Bayan Abdrakhmanova, Director, Center for Strategic Analysis Sholpan Kaimoldina, Deputy Director, Center for Strategic Analysis Temirlan Otepov, Senior Expert, Center for Strategic Analysis Aidana Terlikbayeva, Senior Expert, Center for Strategic Analysis Abylaikhan Khamitzhan, Senior Expert, Center for Project Management Sang-Ha Yoon, Associate Research Fellow, International Macroeconomics Team Subin Kim, Senior Researcher, International Macroeconomics Team

Korea Rep. Korea Institute for International Economic Policy (KIEP) http://www.kiep.go.kr/eng/

Latvia University of Latvia Centre for European and Transition Studies, LU CETS http://www.lu.lv/cets Lithuania Enterprise Lithuania www.enterpriselithuania.com Vytautas Adomaitis, Regulatory Policy Luxembourg Chamber of Commerce of the Grand Duchy of Luxembourg www.cc.lu Malaysia Malaysia Productivity Corporation (MPC), Petaling Jaya, Selangor www.mpc.gov.my Dato’ Abdul Latif Hj. Abu Seman, Director General MPC

Mrs. Zane Zeibote

Officer Irena Karelina, Project Manager

Ms. Christel Chatelain, Head of Economic Affairs Mr. Jean-Baptiste Nivet, Senior Economist Ms. Sidonie Paris, Economist En. Zahid Ismail, Deputy Director General MPC Datin Zainon Bakar, Deputy Director General MPC Pn. Wan Fazlin Nadia Wan Osman, Director MPC

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IMD WORLD COMPETITIVENESS BOOKLET 2021

Mexico Center for Strategic Studies for Competitiveness

www.ceec.edu.mx M.S. Carlos Maroto Espinosa, CEO

Mongolia Economic Policy and Competitiveness Research Center www.ecrc.mn

Mr. Tsagaan Puntsag, Founder and Chairman of Board Ms. Lakshmi Boojoo, Director General Ms. Odonchimeg Ikhbayar, Deputy Director and Head of Research Ms. Tungalag Erdenebat, Research Economist Mr. Mungunjiguur Battsolmon, Research Economist Ms. Munkhshur Purevsuren, Researcher and Administrative Officer Mr. Oyundalai Amarsaikhan , Research Economist Ms. Yesunchuluu Khuderchuluu, Research Economist

Netherlands Confederation of Netherlands Industry and Employers (VNO-NCW), The Hague www.vno-ncw.nl

Mr. Thomas Grosfeld Mr. Tim Zandbergen

New Zealand Kerridge & Partners, Auckland https://kerridgepartners.com/ Peru CENTRUM PUCP https://centrum.pucp.edu.pe/

Mr Peter Kerridge, Partner

Mr. Percy Marquina, General Director Mrs. Beatrice Avolio, Head of the Graduate Business Department Mr. Luis Del Carpio, Director of CENTRUM Competitiveness Center Mr. Victor Fajardo, Researcher of CENTRUM Competitiveness Center Jamil Paolo Francisco, Ph.D. – Executive Director, AIM RSN PCC & Associate Dean, Asian Institute of Management John Paul Flaminiano – Associate Director and Senior Economist, AIM RSN PCC Christopher Ed Caboverde – Research Associate, AIM RSN PCC

Philippines Asian Institute of Management Rizalino S. Navarro Policy Center for Competitiveness (AIM RSN PCC) policy.aim.edu

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IMD WORLD COMPETITIVENESS BOOKLET 2021

Poland SGH Warsaw School of Economics World Economy Research Institute Collegium of World Economy https://ssl-www.sgh.waw.pl/pl/Strony/ default.aspx Portugal Porto Business School, University of Porto, Porto https://www.pbs.up.pt/ Qatar Department of Strategic Planning Planning & Statistics Authority www.psa.gov.qa Romania CIT-IRECSON Center of Technological Information, Bucharest www.cit-irecson.ro

Prof. Marzenna Weresa Dr. Anna Dzienis

Prof. Daniel Bessa Prof. Álvaro Almeida Prof. José Luís Alvim Prof. Ramon O’Callaghan Dr. Rui Coutinho

Hissa Alassiry, Project Manager Dr. Hasan Mahmoud Omari, Economic Development Expert

Mr. Bogdan Ciocanel, PhD, Director Mr. Dan Grigore, Economist

Russia Moscow School of Management SKOLKOVO https://school.skolkovo.ru/en/

Dr. Andrey Shapenko, Associate Professor, Academic Director, MBA Programme Mr. Vladimir Korovkin, Head of Digital and Innovations Research H.E. Dr. Eiman AlMutairi, CEO of National Competitiveness Center Waleed AlRudaian, Vice President Salman M. AlTukhaifi, Director of Analytical Department Deema Almudaheem, Project Manager Abdulrahman AlGhamdi, Senior Analyst

Saudi Arabia NCC, National Competitiveness Center https://www.ncc.gov.sa/en/Pages/default. aspx

Singapore Singapore Business Federation www.sbf.org.sg/ Economics Division, Ministry of Trade and Industry, Singapore www.mti.gov.

Ms. Cheryl Kong, Assistant Executive Director

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IMD WORLD COMPETITIVENESS BOOKLET 2021

Slovak Republic F.A.Hayek foundation, Bratislava http://www.hayek.sk/ Slovenia Institute for Economic Research, Ljubljana http://www.ier.si/ University of Ljubljana, Faculty of Economics http://www.ef.uni-lj.si/en

Martin Reguli, M.A.

Mr. Peter Stanovnik, PhD, Associate Professor Ms. Sonja Ursic, M.A. Ms. Mateja Drnovsek, PhD, Full Professor Mr. Ales Vahcic, PhD, Full Professor

South Africa Productivity SA https://productivitysa.co.za/

Mr Mothunye Mothiba, CEO Dr Leroi Raputsoane, Chief Economist Ms Juliet Sebolelo Mashabela, Economist

Spain Spanish Confederation of Employers, Madrid www.ceoe.es Taiwan, China National Development Council, Taipei http://www.ndc.gov.tw

Ms. Edita Pereira, Head of Economic Research Unit Ms. Paloma Blanco, Economic Research Unit

Ms. Kao, Shien-Quey, Deputy Minister Ms. Wu, Ming Huei, Director of Economic Development Department Mr. Wang, Chen-Ya, Specialist

Thailand Thailand Management Association (TMA), Bangkok www.tma.or.th

Ms. Wanweera Rachdawong, Chief Executive Officer, TMA Ms. Pornkanok Wipusanawan, Director, TMA Center for Competitiveness Mr. Nussati Khaneekul, Senior Manager, TMA Center for Competitiveness

Turkey TUSIAD, Turkish Industry and Business Association Economic Research Department www.tusiad.org United Arab Emirates (UAE) Federal Competitiveness & Statistics Authority (FCSA), Dubai http://fcsc.gov.ae/

Gizem Öztok Altınsaç, Chief Economist İsmet Tosunoğlu, Expert Oğuzhan Çiğdem, Junior Expert

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IMD WORLD COMPETITIVENESS BOOKLET 2021

Ukraine International Management Institute (MIM- Kyiv) https://mim.kiev.ua/en Venezuela National Council to Investment Promotion (CONAPRI) www.conapri.org

Dr. Iryna Tykhomyrova, President Dr. Volodymyr Danko, Professor Ms. Oksana Kukuruza, External Relations Director

Mr. Juan Cabral, Executive Director Ms. Jennyn Osorio, Manager of Economic Affairs Ms. Lilian Zambrano, Manager of Legal Affairs

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IMD WORLD COMPETITIVENESS BOOKLET 2021

Competitiveness under duress: Global trends in the COVID era Arturo Bris Director Christos Cabolis Chief Economist

1. Introduction José Caballero Senior Economist

Marco Pistis Research Specialist

and the Netherlands, for Sweden, geopolitical conflicts become a point of concern. Meanwhile, in Singapore working remotely is an issue that calls for attention. That said, the importance of the prolonged presence of COVID-19 may be on the minds of executives because countries that performed well in the ‘first’ wave of the pandemic, found themselves in challenging times in the ‘second’ or ‘third’ waves. In 2020, there were several challenges: disrupted global supply chains, increases in unemployment, declines in output production are just a few. In this context, the agility of an economy, its capacity for innovation, the digitalization capabilities to support remote work and distant learning, welfare benefits and social cohesion, have been essential for navigating the crisis. In fact, such factors directly contributed to the competitiveness trends we observe in the 2021 IMD World Competitiveness Yearbook. Figure 2 displays the executives’ views on how successful companies in highly competitive economies have fared in terms of innovation (i.e., adopting

In the pages of the IMD World Competitiveness Yearbook one year ago, we outlined the beginnings of what seemed to be a health and economic crisis. We spoke about the pandemic that was on our doorstep while political leaders worldwide used different strategies to contain the infections and protect the citizens of their countries. Here we are, one year on, and COVID-19 remains one of the most important challenges for the world economy. In fact, the prolonged presence of COVID-19 is the single most important factor affecting businesses in the year to come. This is presented in Figure 1 which shows the responses of mid- and high-level executives in the top five most competitive economies for 2021. What we can take from Figure 1 is that there are some global trends with respect to the business environment in 2021 which, in addition to the presence of COVID-19, include environmental sustainability. Interestingly, there are country-specific choices as well. Thus, while corporate social responsibility is a trend for Switzerland, Denmark

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IMD WORLD COMPETITIVENESS BOOKLET 2021

Figure 1. Significant socio-economic and political factors in 2021

Most important trends impacting business in 2021 according to executives The prolongedpresenceof COVID-19 Environmentalsustainability Geopoliticalconflicts CorporateSocialResponsibility Working remotely

80%

73%

70%

66%

65%

63%

62%

61%

60%

60%

60%

54%

52%

50%

44%

43%

43%

40% % of respondents (multipleanswers)

35%

32%

30%

20%

10%

0%

Switzerland

Sweden

Denmark

Netherlands

Singapore

new technologies and repurposing existing technologies) and in relation to supporting their staff’s digitalization (i.e., access to training in new technologies and redeploying existing skills). Again, we can identify a global trend: executives identified the adoption of new technologies as the most successful undertaking from last year. This suggests an agile response to the effects of the pandemic in the private sector. Then, different economies are characterized by alternative measures adopted. While Switzerland and Denmark advocate that repurposing current technologies was an essential response to the pandemic, Sweden and Singapore were enabling employees to train according to technological change. There are three pillars that innovation depends upon: talent, the availability of capital and supportive regulation. Education is the most important long-term criterion that results in the development of highly skilled labor,

which in turn affects both the level of productivity as well as R&D capabilities. Countries like Switzerland, Singapore and the Nordic economies dominate the top positions. With respect to the availability of capital, economies like Switzerland, the USA, Hong Kong SAR, the Netherlands and Finland are in the top of the Finance sub-factor. And finally, the third pillar — Institutional Framework — is dominated by Switzerland, Norway, Sweden, Netherlands and Denmark. The second broad trend is related to the capacity of an economy to transition away from the way work and school functioned in the past, towards the new way of remote working and learning. This is measured by the Technological Infrastructure in which countries like Singapore, the Netherlands, Sweden, Finland and the USA capture the top positions of the sub-factor. The economic disruption introduced by the pandemic resulted in increasing levels of unemployment as well as

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IMD WORLD COMPETITIVENESS BOOKLET 2021

Figure 2. Measures adopted under pandemic conditions

Under the current pandemic, your company has successfully Repurposed current technologies Adopted new technologies Facilitated the staff’s redeploymentof their existing skills Enabled employees to train according to technological changes None of the above

60%

50%

40%

30%

% of respondents (multipleanswers)

20%

10%

0%

Switzerland

Sweden

Denmark

Netherlands

Singapore

the struggling of some enterprises to remain in business. Loans and rents that needed to be paid, as well as wages and payments for intermediary goods may not have been available. Economies that had a long history of a strong welfare state were not the only ones who succeeded in navigating

in this turbulence. Other economies introduced at once sizeable benefits to alleviate the challenges that individuals and businesses faced. This is measured by the Government Efficiency factor in which Hong Kong SAR, Switzerland, the UAE, Norway and Singapore dominate the highest positions in the ranking.

Figure 3. Trends in average overall competitiveness by region 2017-2021

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IMD WORLD COMPETITIVENESS BOOKLET 2021

Finally, economies with a strong Societal Framework have also performed very well. It measures long- term characteristics such as gender equality and crime (measured by the rate of homicides) as well as non- tangible aspects like social cohesion, justice and equal opportunities. All the Nordic economies in our sample and Switzerland dominate this sub-factor. Before proceeding, it is important to highlight that this year we have the Figure 3 presents the sub-regional overall competitiveness ranking trend for the years 2017 to 2021. Over the past year, Eastern Asia, Western Europe and Ex-CIS and Central Asia achieved an increase in their competitiveness rankings; the other sub-regions experience a decline in their overall average positions. Eastern Asia remains at the top of the sub-regional rankings and with an average competitiveness position of the economies in this area further increasing from 18 th to 17 th , reversing a slowly declining trend started in 2018. Western Europe continues its positive trend started in 2019 and keeps narrowing its competitiveness 2. Regional Level Trends

pleasure of welcoming a 64 th economy to the group that we study: Botswana. In the following sections we review the performance of different economies in this year’s Competitiveness Ranking. Firstly, we examine the different regions and then identify the economies within each region that outperform the average country we study.

gap with Eastern Asia. Over the past year, countries in this sub-region have steadily improved their competitiveness performance, reaching an average 19 th position in 2021. Conversely, North America remains on a declining path in 2021. Since 2016, the competitiveness levels of the countries in this sub-region fell from an average 21 st position in the ranking to an average 26 th this year. Southern Asia and the Pacific experienced a minor decline between 2020 and 2021 from 28 th to 29 th position. In Western Asia and Africa, the decline in competitiveness levels from an average 34 th to 38 th place.

Figure 4. Average factor rank by region, 2021

GovernmentEfficiency

BusinessEfficiency

Infrastructure

EconomicPeformance

0

0

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10

10

10

14

16 17

20 20

22

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30

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36

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47 49

49

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53

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50

55

57

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60

60

60

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70

70

70

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IMD WORLD COMPETITIVENESS BOOKLET 2021

Eastern Europe remains stable with an average position of 43 rd which is similar to the past 4 years. Ex-CIS and Central Asia economies instead experience a rebound in overall competitiveness reaching an average position of 46 th . The improvement recorded between 2020 and 2021 brings the average competitiveness of countries in this area back to their 2017 level. Finally, South America experiences a reversal in the competitiveness improvements achieved between 2019 Figure 5 illustrates the variation in the overall competitiveness ranking among the countries in our sample. In Appendix 1 , we also include the overall ranking changes in the last 3 years (2019- 2021, per country). Appendix 2 shows the ranking variations of the studied economies at the factor level in the years 2020-21. 3. Country Level Trends

and 2020. Over the past year, countries in this sub-region lowered their average competitiveness levels by 3 places, declining from 54 th to 57 th position. In Figure 4 we present the sub- regional average rankings at the competitiveness factor level for 2021. It shows this year’s dominance of the Eastern Asia and Western Europe sub- regions and the weakness experienced by South America at this level of analysis.

High Ranked Economies Switzerland leads the ranking this year, improving from 3 rd place. It is followed by Sweden which also moves up from 6 th . Denmark ranks 3 rd (down from 2 nd ), the Netherlands remains at 4 th and Singapore drops to 5 th (from 1 st ). While Norway moves up one place to 6 th , Hong Kong SAR drops to 7 th (from 5 th ). Taiwan

Figure 5. Improvements/declines in overall competitiveness by country 2020-2021

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IMD WORLD COMPETITIVENESS BOOKLET 2021

China joins the top 10 (8 th from 11 th ); and the UAE and the USA remain in the same position (9 th and 10 th , respectively). Switzerland’s improvement is largely down to its economic performance, particularly in international investment and employment. In addition, under government efficiency, it boosts its position to the top of the ranking in public finance and institutional framework. Switzerland also progresses in productivity and efficiency, labor market, management practices, and attitudes and values, all components of business efficiency. The country advances to lead the rankings in infrastructure; more specifically it reaches the top in education and takes the third spot in health and environment. Sweden also performs well in economic performance, specifically in domestic economy and employment. It also strongly progresses in government efficiency with advances in public finance. Under business efficiency, Sweden slightly improves in productivity and efficiency and management practices but greatly advances in labor market. It remains at the top of the ranking in health and environment and performs strongly in education. Despite performing soundly in international trade, overall economic performance overall and business efficiency (in which it ranks first), Denmark slightly drops in the rankings. The decline stems from a relatively poor performance in government efficiency (mainly tax policy and, to a lesser extent, public finance). In addition, Denmark’s display in infrastructure shows a slight decline in all of its components, with the exception of the basic infrastructure. The Netherlands shows relative declines in economic performance

(particularly in the domestic economy, international trade and employment) and government efficiency. In the latter, the largest decline is in tax policy but there are other less sharp drops in public finance and business legislation. Despite this relative slump, the Netherlands retains its position in the top five. This is due mainly to hanging on in the top five in business efficiency with a strong improvement in attitudes and values, and also due to a slight advancement in infrastructure, particularly noteworthy in the cases of technological infrastructure and education. Singapore’s downturn is largely the result of its display in the domestic economy and employment in which it declines. Under government efficiency, public finance shows the same dipping pattern. With the exception of management practices (which stagnate), all components of business efficiency drop to different degrees. The deterioration is greater in productivity and efficiency, finance, and attitudes and values. Singapore’s performance is similar with respect to infrastructure; only one component (technological infrastructure) does not decline but remains in the same spot. The largest dip is in education followed by the basic and scientific infrastructures, and health and environment. In the case of Norway, the improvement comes on the back of progress in all competitiveness factors. The improvement in economic performance is down to advancements in employment and prices, and comes in spite of slight declines in domestic economy and international trade. The trend is similar under government efficiency, with drops in public finance and tax policies compensated with rises in institutional framework and business

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IMD WORLD COMPETITIVENESS BOOKLET 2021

legislation, remaining in the lead position in societal framework. Productivity and efficiency, labor market, finance and attitudes and values set the positive trend in business efficiency. In terms of infrastructure, Norway advances in the basic and scientific infrastructures, health and environment, and education. Hong Kong SAR experiences slight declines in economic performance, business efficiency and infrastructure but remains in the top spot in government efficiency. The drop in economic performance is mainly due to slight declines in international investment and prices (in which it occupies the penultimate spot) and steep deterioration in employment. There are also some declines within government efficiency (public finance and societal framework). With the exception of management practices, all components of business efficiency decline. With respect to infrastructure, while basic infrastructure and health and environment display a downturn, the technological and scientific infrastructure remain somewhat stagnant, but there are some gains in education. Taiwan, China rises to the top 10 as a result of advancements in all competitiveness factors with the largest improvement in economic performance. In the latter, all its components progress (excluding a slight drop in international investment) with a strong performance in employment. In government efficiency, there is a decline in tax policy, but all other components improve to different degrees. There are no downturns among the components of business efficiency, but productivity remains in the same position. The labor market stands out for its strong performance. In infrastructure, the areas

of scientific infrastructure, health and environment and education improve. The UAE, despite a decline in economic performance (mainly due to the plummeting of employment) and a somewhat stagnant display in infrastructure, remains in the same position. It continues to achieve an overall strong performance in government efficiency. In terms of business efficiency, there are drops in productivity and efficiency together with finance (continuing in the same pattern as that of 2020). However, it remains strong in the labor market, attitudes and values components, and to a lesser extent in management practices. The USA rounds up the top 10, despite experiencing a downturn in economic performance, government efficiency and infrastructure. The employment component sees a sharp decline under economic performance. With the exception of institutional framework, all other components of government efficiency decline, societal framework displaying the largest drop. Business efficiency remains strong, despite a slight drop in productivity, showing some recovery when compared to the 2020 results. Under infrastructure, the USA remains in the top spot in scientific infrastructure, also showing strong performance in technological infrastructure. Eastern Europe This sub-region (see Appendix 3 for details about the sub-regions included in this report) is led by Estonia which boosts its ranks moving to the 26 th place, up from 28 th . Lithuania follows, advancing from the 31 st spot to the 30 th . While the Czech Republic drops one spot to the 34 th , Latvia improves from the 41 st to the 38 th . Slovenia declines five places to 40 th

22

IMD WORLD COMPETITIVENESS BOOKLET 2021

in the ranks. Conversely, Hungary boots its ranking by five spots to 42 nd . Romania and the Slovak Republic progress from the 51 st to the 48 th spot and from 57 th to 50 th , respectively. In the same vein, Ukraine improves by one spot to 54 th as does Croatia to 59 th . Poland experiences the largest downturn in this sub-region, dropping eight spots to 47 th place. Similarly, Bulgaria moves down from 48 th to 53 rd position. Estonia’s improvement originates in economic performance (particularly in the domestic economy), government efficiency and infrastructure. Its performance in business efficiency experiences a downturn with the largest decline being in productivity. In the case of Poland, the decline is mainly due to the plummeting of government and business efficiency. Under the former, the largest drops are in business legislation and the societal framework. Public finance and the institutional framework also display a steep decline. In business efficiency, all sub-factors deteriorate with the largest decreases being in the labor market, management practices and attitudes and values. The trend is similar for infrastructure in which basic infrastructure and health and environment show the steepest slumps. Eastern Asia As discussed earlier, from these sub- region, Hong Kong SAR (7 th ) and Taiwan, China (8 th ) are among the top-ranking economies. China improves from 20 th position to 16 th , and similarly, Japan takes 31 st from 34 th . Korea Rep. remains in 23 rd position. China improves this year as a result of advancements in all competitiveness factors. In economic performance, it

shows a strong recovery in international trade (when compared to 2020). There is sharp improvement in government efficiency, mainly because of hefty boost in tax policy but also to lesser increases in public finance, business legislation and institutional framework. Despite a downturn in productivity, labor market, management practices and attitudes and values, business efficiency shows a slight gain. This is due to an improvement in finance. All sub-factors of infrastructure improve with the exception of scientific infrastructure which remains in the same position. Ex-CIS and Central Asia In this sub-region, Kazakhstan improves from the 42 nd rank to the 35 th . Similarly, Russia boosts its position up to the 45 th place (from 50 th ) as it does Mongolia which moves up to 60 th (from 61 st ). Kazakhstan advancement results from improvements in all competitiveness factors. In economic performance all sub-factor progress with the largest increase in employment. Likewise, within government efficiency, all sub-factors advance with the best performance in tax policy. Under business efficiency, Kazakhstan significantly boosts the labor market component. Basic infrastructure shows the largest increase with infrastructure. North America In this sub-region, as noted earlier, the USA remains in the 10 th place. Canada and Mexico, however, decline from 8 th to 14 th and from 53 rd to 55 th , respectively. Canada’s decline is largely due to downturns in government and business efficiency. With respect to the former, public finance, tax policy, institutional framework and the societal framework all show deterioration to different degrees. In terms of business efficiency, labor market

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IMD WORLD COMPETITIVENESS BOOKLET 2021

displays a sharp decrease with finance, management practices and attitudes and values experiencing declines. South America All countries in the South American sub-region included in our sample decline in the rankings, with the exception of Venezuela which remains in the bottom spot (64 th ). Whereas Chile remains as the best ranking economy in the region (44 th down from 38 th ), the rest of the countries rank in the bottom 10. Colombia experiences a downturn decreasing to 56 th (from 54 th ). Similarly, the positions of Brazil (57 th from 56 th ), Peru (58 th from 52 nd ) and Argentina (63 rd from 62 nd ), deteriorate. Chile’s deterioration in the ranking comes on the back of declines in economic performance, and government and business efficiency. Employment (under economic performance) and the labor market (under business efficiency) sub-factors plummet. Southern Asia & The Pacific Most economies in this sub-region improve this year, with the exception of Singapore (as stated previously), Australia which moves down to the 22 nd place (from 18 th ) and the Philippines which declines to 52 nd (from 45 th ). Conversely, New Zealand advances from the 22 nd to the 20 th rank. Likewise, Malaysia from 27 th to 25 th , Thailand from the 29 th to the 28 th and Indonesia from the 40 th to 37 th position. India remains at 43 rd . Indonesia’s improvement is mainly due to progress in government efficiency, particularly in public finance and business legislation which see sharp increases, and business efficiency. In the latter, labor market, finance and attitudes

and values advance. Thailand, likewise, improves as a result better performance in government and business efficiency but also in infrastructure. In government efficiency, all public finance, tax policy, institutional framework and business legislation increase. In regard to business efficiency, productivity and labor market progress (with the latter showing the largest improvement). Finance and attitudes and values remain in the same position. Thailand displays some gains in basic and scientific infrastructures. Western Asia and Africa While the UAE leads this sub-region at 9 th , Botswana joins the competitiveness rankings at 61 st . Qatar 17 th , Israel 27 th , Saudi Arabia 32 nd , Turkey 51 st , and South Africa 62 nd all show at dip in their performance (from 14 th , 26 th , 24 th , 46 th and 59 th , respectively). Qatar decline is the result of a relatively weaker economic performance with significant declines in domestic economy, and international trade and investment, although it remains in the top ranking in employment. Another contributing factor to Qatar drop is its performance in business efficiency, mainly in productivity, management practices and attitude and values. Jordan is the only country in this sub- region that sees an improvement (49 th from 58 th ). Overall, such an advancement comes on the back of increases in government and business efficiency, and infrastructure. It shows robust performance in public finance (within government efficiency), and productivity and labor market (under business efficiency). Western Europe Several Western European economies are among the top-ranking countries (as discussed previously). The rest of

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IMD WORLD COMPETITIVENESS BOOKLET 2021

the sub-region’s countries are spread throughout the ranking, with nine of them nested in the top half of the table and five in the bottom half. Finland raises to the 11 th position (from 13 th ). Likewise, Luxembourg reaches the 12 th place (from 15 th ). While Ireland drops to 13 th (from 12 th ), Germany raises to the 15 th rank from the 17 th . Germany’s improvement originates in its progress in all competitiveness factors. At the sub-factor level, the strongest performance is in domestic economy, international investment and employment (under economic performance), and scientific infrastructure and health and environment (under infrastructure). The United Kingdom improves one spot to the 18 th place, while Austria drops three places to the 19 th , Iceland remains The 2021 global trends have highlighted the importance of innovation, digitalization of the economy, welfare benefits and social cohesion. Highly competitive countries have been able to tackle these challenges by strengthening their institutional and social frameworks. Competitive economies succeeded in transitioning to a remote work routine while also allowing remote learning. In addition, the addressing of unemployment has been fundamental. In terms of other policies, those that ensured the effectiveness of key public spending as reflected by the trends in competitiveness sub-factors such as public finance, tax policy and business legislation, were essential to relieving the pressure experienced by the economies in our sample. 4. Concluding Remarks

at the 21 st . Belgium slightly advances from the 25 th rank to the 24 th and France boosts its position from the 32 nd to 29 th . Cyprus moves into the bottom half of the ranking at 33 rd (from 30 th ). While Portugal improves one place to the 36 th , Spain drops three to the 39 th . Conversely, Italy and Greece show a similar progress of three spots ranking 41 st and 46 th , respectively. Cyprus decline is largely due to its performance in government efficiency, business efficiency and infrastructure. The most significant downturn is in business efficiency in which all sub-factors drop. The largest deterioration in government efficiency is in public finance, and within infrastructure, is in education. Furthermore, the private sector in high- ranking economies has not only been fundamental to sustaining productivity levels and access to finance but also in strengthening the labor market through, for example, maintaining high levels of staff motivation and providing skill development opportunities for the workforce. Motivation and further skills have facilitated the transition to a more digitalized workforce. Finally, trends in highly ranked economies show that the health and education systems remain at the core of competitiveness contributing to having successfully endured the pandemic – so far.

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IMD WORLD COMPETITIVENESS BOOKLET 2021

Appendices

Appendix 1: Overall ranking change per country, 2019-21

WCY 2021

10 64

63 22

18

19

54

24

​ 63 WCY 2020

62 18

9

19 10

61

16

51

57

55

25

63 WCY 2019

​ 61 18 19

9

-

28

23 3

53

46

56

54

27

8

14

29

5

-

48

51

59

1

11

44

8

25

48

3

2

38

16

16

13

6

4

20

42

39

56

9

14

36

54

62

59

36

52

59

60

56

40

60

33

35

30

37

41

50

34 3

57

33 2

53

33 8

32 5

24 1

26 1

35

28

26

45

15

50

13

45

11

49

31

51

32

48

29

10

17

14

17

39

17

58

15

37

49

38

2

36

46

39

46

5

47

47

7

55

45

20

47

11

43

52

52

42

21

21

32

7

43

58

6

7

21

62

24

22

40

6

50

44 30 57 34 28 40 29 12 22 12 43

4

20

61

37

26

53

44 34 58 42 23 41 31 15 27 13

4

60

27

55

41 31 49 35 23 38 30 12 25

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IMD WORLD COMPETITIVENESS BOOKLET 2021

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