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