IMD World Competitiveness Booklet 2023

factor, North America displays higher ranks than both Eastern Asia and Western Europe, proof of its stronger resilience to inflationary pressures. For similar reasons, Western Asia and Africa, and Southern Asia & the Pacific improve their Largest shifts In the overall ranking, Indonesia experi ences this year’s largest increase to 34 th position (from 44 th ). At the factor level, its progress is driven by robust achievements in economic performance (rising to 29 th from 42 nd ) and business efficiency (20 th from 31 st ). Indonesia also improves, to a lesser extent, in the government effi ciency factor (31 st from 35 th ). Although it progresses in all the components of infrastructure, it gains one position in that factor, rising to 51 st mainly as a result of its performance in scientific Infrastructure (49 th ), health and the environment (58 th ), and education (51 st ). Concluding remarks The polycrisis of 2023 is having a signif icant impact on the competitiveness of economies worldwide. For instance, regions and countries with stable indig enous energy production, robust supply chains, and favorable trade balances have been able to maintain or improve their competitiveness. At the same time, econ omies heavily reliant on raw materials and energy imports have experienced declines. According to our results, global business confidence levels are gloomy, reflecting the concerns of executives with regard to the risk of a global economic recession or slowdown, inflationary pressures, and geopolitical conflicts. In this context, environmental issues and climate change become secondary concerns compared to macroeconomic and geopolitical ones. Our results also show that among the regions we cover, Western Asia and Africa, Southern Asia & the Pacific, and Ex-CIS and Central Asia experienced increases in

average ranking across all four competi tiveness factors, gaining important posi tions in the economic performance and business efficiency factors compared to 2022.

Latvia experiences the largest drop in the overall ranking, moving to 51 st (from 35 th ). Such a decline is mainly the result of its performance in government efficiency in which it drops to 39 th from 28 th and in busi ness efficiency (51 st from 31 st ). Latvia also decreases in economic performance (55 th from 54 th ) and infrastructure (41 st from 35 th ). To different degrees, it drops in all the components of government efficiency, business efficiency, and infrastructure. Some of the largest declines are in the public finance sub-factor (31 st ), labor market sub-factor (52 nd ), and manage ment practices (60 th ). their competitiveness rankings. Eastern Asia and Western Europe have slightly fallen in their average competitiveness positions while Eastern Europe expe rienced the largest decline in compet itiveness. South American economies also dropped. Overall, our results highlight the complex interplay of macroeconomic and geopo litical factors in driving competitiveness. They emphasize, for example, the impor tance of stable energy production, resil ient supply chains, and favorable trade balances in maintaining or improving competitiveness in the face of global challenges. Finally, our results reveal some degree of prioritizing immediate economic concerns over environmental sustainability and social responsibility among the members of the private sector we surveyed.

32