IMD World Competitiveness Booklet 2023

Figure 3: Regional gasoline price

Regional gazoline price Regional Consumer Price Index (CPI) r Regio l unemployment rate

Regional Consumer Price Index (CPI)

10 12 14 16 12

2 10 12 14 10 12 14 16

2.5

1.5

0 2 4 6 8

0 2 4 6 8

0 2 4 6 8

1

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0

2018 2018

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Western Asia & Africa 2022 2021 2021

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Eastern Europe 2020

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Ex-CIS & Central Asia Wester Europe s e Western Europ

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Southern Asi a & The Paci fic Western Asia & Africa i f i Western Asia & Africa Western Asia & Africa Southern Asi a & The P ci fic

North Ameri ca - I Western Eu ope Ex-CIS & Cent al Asia

Eastern Asia Eastern Europe

Ex-CIS & Central Asia l i Ex-CIS & Central si

South America Eastern Asia i Eastern Asia

Southern Asi a & The Paci fic i ci fi Southern Asi a & The Paci fic

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North Ameri ca North Ameri ca i

North Ameri ca

South America

is evident in the cases of China, the United States, and Europe, which have each implemented measures to strengthen and revitalize key domestic industries. Notably, the recent Inflation Reduction Act and CHIPS & Science Act in the US exemplify a concerted industrial policy approach to fortify essential sectors such as renewable energy production and the semiconductor industry. Europe’s provisional agreement on the CHIPS Act likewise highlights a similar commitment to bolster the European semiconductor ecosystem. Such policies have two significant impli cations. Firstly, driven by geopolitical considerations, the focus on internal markets has led to a fragmentation of both technology production and regulation. This fragmentation may pose poten tial challenges for developing countries, restricting their access to opportunities such as those available in the countries that initiate these policies – like the US. Several products – semiconductors, for instance – are not to be used in goods produced in the US, which is hindering their technological advancement.

Secondly, the emphasis being placed on renewable energy production presents an opportunity to drive much-needed innovation in this ambit, which could potentially reduce the costs associated with renewable energy generation. By investing in renewable energy, countries can simultaneously pursue sustainability goals and decrease reliance on traditional energy sources. Today’s fragmented world is expected to command the attention of public and private decision-makers– if it has not done so already. Successfully navigating this complex landscape necessitates proactive strategies that align with evolving geopo litical dynamics. Decision-makers must prioritize efforts to mitigate the adverse effects of fragmentation on developing countries while capitalizing on the poten tial for innovation in renewable energy production. Collaboration, knowledge sharing, and agile policy frameworks will be crucial in shaping a more resilient and inclusive globalization framework.

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