Tuesday, January 12, 2021 / 09:25 AM / By World Economic
Forum / Header Image Credit: World Economic Forum

The 2020 special edition of The Global Competitiveness
Report (GCR) series comes out at a very difficult and uncertain historical
moment. The outbreak of the COVID-19 pandemic has not only led to a global
health crisis and deep economic recession-deeper than the downturn during the
2008-2009 financial crisis-but has also created a climate of profound
uncertainty about the future outlook.
At this pivotal moment, there are growing calls for "building back better". While the immediate priority is to respond to the
health crisis, this moment in time also offers a unique opportunity to reflect
on the fundamental drivers of growth and productivity that have degraded since
the financial crisis. It is also a moment to determine how we may shape our
economic systems in the future so that they are not just productive but also
lead to environmental sustainability and shared prosperity.
The Global Competitiveness Report series has since its
first edition aimed to prompt policymakers beyond short term growth and to aim
for long-run prosperity. The 2019 edition of the Global Competitiveness Report
showed how declining trends in fundamental aspects of productivity have been
masked by long-standing accommodative monetary policy but have remained
bottlenecks for strengthening economic development.
This unusual moment calls for innovative and
much-needed shifts in policy. Therefore, in 2020 the long-standing Global
Competitiveness Index (GCI) rankings have been paused. Instead, this special
edition is dedicated to elaborating on the priorities for recovery and revival,
and considering the building blocks of a transformation towards new economic
systems that combine "productivity", "people" and "planet" targets. In 2021,
the report will revert to a benchmarking exercise that will provide a new
compass for the future direction of economic growth.
This special edition analyses historical trends on
factors of competitiveness as well as the latest thinking on future priorities.
It provides recommendations against three timelines: a) those priorities that
emerge from the historical analysis before the health crisis; b) those
priorities needed to restart the economy, beyond immediate responses to the
COVID-19 crisis, while embedding people and planet into economic policies
(revival over the next 1-2 years); and c) those priorities and policies needed
to reboot economic systems in the longer run to achieve sustainable and
inclusive prosperity in the future (transformation over the next 3-5 years).
Recommendations and timeframes are grouped into four
broad areas of action: 1) reviving and transforming the enabling environment,
2) reviving and transforming human capital, 3) reviving and transforming
markets, and 4) reviving and transforming the innovation ecosystem. An initial
assessment of countries on readiness for transformation is also provided that
converts key priorities into quantitative measures for 37 economies.
The key findings of the report are summarized below.
Reviving and
transforming the enabling environment
- Before the COVID-19 crisis, a long-standing issue
had been the ongoing and consistent erosion of institutions, as shown by
declining or stalling checks and balances and transparency indicators. Against
this backdrop, in the revival phase governments should prioritize improving
long-term thinking capacity within governments and enhance mechanisms to
deliver public services, including greater digitalization of public services.
In the transformation phase, governments should work to ensure that public
institutions embed strong governance principles and to regain public trust by
serving their citizens.
- A second area of concern before the 2020 pandemic
was high levels of debt in selected economies as well as widening inequalities.
The emergency and stimulus measures have pushed already high public debt to
unprecedented levels, while tax bases have continued eroding or shifting. To
respond to these issues, in the revival phase, the priority should be on
preparing support measures for highly indebted low-income countries and plan
for future public debt deleveraging. In the longer run (transformation phase)
countries should focus on shifting to more progressive taxation, rethinking how
corporations, wealth and labour are taxed. This will require both national
reforms and setting an international cooperative framework.
- Before the COVID-19 crisis, despite the significant
expansions of ICT access, ICT availability and use remained far from universal.
The COVID-19 crisis has accelerated digitalization in advanced economies and
made catching up more difficult for countries or regions that were lagging
before the crisis.
To address this challenge, in the revival phase,
countries should upgrade utilities and other infrastructure as well as closing
the digital divide within and across countries for both firms and households.
In the transformation phase, the priority should be on upgrading infrastructure
to broaden access to electricity and ICT, while, at the same time, accelerating
energy transition.
Reviving and
transforming human capital
- For several years before the crisis, skills
mismatches, talent shortages and increasing misalignment between incentives and
rewards for workers had been flagged as problematic for advancing productivity,
prosperity and inclusion. Because of the pandemic and subsequent acceleration
of technology adoption, these challenges have become even more pronounced and
compounded further by permanent and temporary losses of employment and income.
To address these issues, countries should focus in the revival phase on
gradually transitioning from furlough schemes to new labour market
opportunities, scaling up reskilling and upskilling programmes and rethinking
active labour market policies. In the transformation phase, leaders should work
to update education curricula and expand investment in the skills needed for
jobs in "markets of tomorrow", and in parallel rethink labour laws for the new
economy and use new talent management technologies to adapt to the new needs of
the workforce.
- The COVID-19 crisis has highlighted a second issue:
how healthcare systems' capacity has lagged behind increasing populations in
the developing world and ageing populations in the developed world. To respond
to this trend, countries should in the revival phase expand health system
capacity to manage the dual burden of current pandemic and future healthcare
needs. In the longer run (transformation) there should be an effort to expand
eldercare, childcare and healthcare infrastructure and innovation.

Reviving and
transforming markets
- Over the past decade, while financial systems have
become sounder compared to the pre-financial crisis situation, they continued
to display some fragility, including increased corporate debt risks and
liquidity mismatches. In addition, access to finance, despite efforts to
increase inclusion in recent years (including through fintech applications), is
not sufficiently widespread. Against this backdrop, countries should in the
revival phase prioritize reinforcing financial markets stability, while
starting to introduce financial incentives for companies to engage in
sustainable and inclusive investments. In the transformation phase, the
attention should shift to create incentives to direct financial resources
towards long-term investments, strengthening stability while continuing to
expand inclusion.
- Pre-crisis, there was increasing market
concentration, with large productivity and profitability gaps between the top
companies in each sector and all others; and the fallout from the pandemic and
associated recession is likely to exacerbate these trends. To address this
issue, countries should in the revival phase strike a balance between
continuing measures to support firms and prevent excessive industry
consolidation with sufficient flexibility to avoid keeping "zombiefirms" in the
system. In the transformation phase, countries should rethink competition and
anti-trust frameworks needed in the Fourth Industrial Revolution, ensuring
market access, both locally and internationally. As a complementary policy,
countries should facilitate the creation of "markets of tomorrow", especially
in areas that require public-private collaboration.
- A third trend that has emerged in this area is the
ongoing reduction on trade openness and the international movement of people,
now vastly stalled due to the pandemic. In both the revival and transformation phases,
countries should lay the foundations for better balancing the international
movement of goods and people with local prosperity and strategic local
resilience in supply chains.
Reviving and
transforming the innovation ecosystem
- In this area, a paradox had recently emerged: a
positive evolution of entrepreneurial culture in the past decade, but the
creation of new firms and breakthrough technologies had stalled. Technology has
lagged especially in the capacity to delivering solutions to energy consumption,
emissions and meeting the demand for inclusive social services. To manage these
complexities, countries should in the revival phase expand public investments
in R&D, incentivize venture capital and R&D in private sector, and
promote the diffusion of existing technologies that support the creation of new
firms and employment in "markets of tomorrow". In the longer run
(transformation) countries should create incentives that favour patient
investments in research, innovation and invention, support the creation of new "markets of tomorrow" and incentivize firms to embrace diversity, equity and
inclusion to enhance creativity.
Assessing readiness for
economic transformation
In aggregating the 11 priorities that emerge from this
analysis for the economic transformation phase, the report provides a
preliminary measure of countries' "transformation readiness". This novel
framework uses the latest available statistics to measure where countries stand
today in this process. This exercise covers a small set of countries (37),
measuring only those priorities for economic transformation rather than the
complete set of factors needed to drive productivity, sustainability and shared
prosperity.
The aim of this exercise is three-fold. First, it maps
the areas of priority against available data points in an effort to better
define the actions and/or policies needed to "build back better" economies that
are productive, sustainable and inclusive. Second, it provides a snapshot of
the current situation in each of the 37 countries, assessing the extent to
which many countries today are on the way towards transforming their economies.
Third, it highlights where the key data gaps lie in assessing current national
policies and performance.
While noting that the available statistics are
insufficient to measure all aspects for achieving economic transformation, the
results show that no country is yet fully ready to transform. Among the
currently measurable policies, however, the 'Nordic model' stands out as the
most promising in shifting towards a productive, sustainable and inclusive
economic system.
Assessing resilience and
crisis disruptions through business sentiment
The impact of the current health crisis had a profound
impact on the perception of business leaders, captured by the Executive Opinion
Survey. Perceptions in some areas indicated that progress critically stalled or
declined during the crisis, while in others there was a marked improvement
compared to previous trends. The top 5 areas that experienced the most movement
downward in advanced economies were Competition in network services,
Collaboration between companies, Competition in professional services,
Competition in retail services, and Ease of finding skilled employees; while in
emerging economies these were Business costs of crime and violence, Judicial
independence, Organized crime, Extent of market dominance, and Public trust of
politicians.
The top 5 areas that experienced the most upward
movement were Government's responsiveness to change, Collaboration within a
company, Venture capital availability, Social safety net protection, and
Soundness of banks in advanced economies; and Collaboration within a company,
Government's responsiveness to change, Efficiency of train services, Venture
capital availability, and Country capacity to attract talent in emerging
economies.
The Executive Opinion Survey also helps to identify
some common features that helped countries better manage the impact of the
pandemic on their economy and their people. Based on the assessment of business
leaders i) economic digitization and digital skills; ii) safety nets and
financial soundness; iii) governance and planning; and iv) health system and
research capacity have contributed to countries' resilience to the health
crisis.

Download Full PDF Report Here

Related News
- Agro-Processing Should Anchor Nigeria's Quest For Global
Competitiveness - Foluso Phillips
- 2018 WEF Global Competitiveness Report Ranks Nigeria 115 Out Of 140
Countries
- Nigeria Ranked 125 Out of 137 Economies in the Global
Competitiveness Report 2017-2018
- Nigeria's Ranking Deteriorates to 127th in 2016 Global
Competitiveness Index Analysis
- Nigeria rises 3 places to rank 124 in Annual WEF Global
Competitiveness Index
- Nigeria ranks 120th out of 148 countries on the Global
Competitiveness Index
- Nigeria's Brand Image and global competitiveness
- .Executive
Orders: Key Enablers for Driving Execution & Impact
- National
Competitiveness Council of Nigeria's State Competitive Index to Help Spur
Growth-Friendly
- The Global
Competitiveness Report 2017-2018
Related News - World
Bank IMF and Dev Agencies
- World Bank
Appears Less Optimistic About Growth Prospects Across the Globe
- Corruption
and COVID-19: The Pandemic Has Heightened The Importance of Stronger
Governance
- Global
Output Expected to Expand by 4% in 2021, Still Below Pre-Pandemic Trend
- AfDB Takes
Steps to Accelerate the Circular Economy in Africa
- African
Development Bank's Board of Directors Approves the Bank's Borrowing
Program for 2021
- Glaciers of
Global Finance: The Currency Composition of Central Banks' Reserve
Holdings
- What to do
When Low-for-Long Interest Rates are Lower and for Longer
- World Bank
Group to Boost Nigeria's Efforts to Reduce Poverty
- IMF Staff
Completes 2020 Article IV Mission to Nigeria
- Open Trade
and Economic Inclusion Key to Post-COVID Recovery

