The competitiveness of an economy isn’t just a measure of its GDP and productivity. It involves political, social, and cultural factors that influence businesses. Governments play a crucial role by providing efficient infrastructure, institutions, and policies. These elements foster sustainable value creation for enterprises.
The IMD World Competitiveness Ranking has provided actionable insights, benchmarking 67 global economies based on their ability to optimize competencies for long-term value creation. The 2024 edition, released in June, continues to be a vital reference in understanding economic competitiveness. Here is the list of the top economies picked from their list.
Singapore
Although Singapore was in the top 5 in the past few years, it has been ranked first in 2024. Multiple reasons have helped Singapore push through to this position.
Singapore manages to stay competitive because of its talented labor pool. This country was ranked second globally for best talent management. Another great aspect that helps in business development here is the funding.
The Monetary Authority of Singapore has announced a USD 111 million funding programme, which will boost the fintech sector. The GDP of Singapore per capita is USD 88,450 which goes to show that this is a wealthy country.
Switzerland
Switzerland has moved up to the second most competitive economy in the IMD’s 2024 ranking. Its success is attributed to a top-tier education system and significant investment in Research and Development, amounting to CHF 23 billion annually. The country boasts a GDP per capita of USD 92,000, with 74% of GDP generated by the services sector. Switzerland’s economy is highly globalized, with strong trade ties and a robust financial sector, supported by low public debt and one of the lowest VAT rates in Europe (8.1% standard rate).
Denmark
Denmark was ranked first in 2022 and 2023. It was ranked third in 2024. Even though there was a decline, it has still managed to have a spot in the top 3 most competitive economies of 2024.
The major factor at play here is Denmark’s labor pool. Denmark has an extremely low unemployment rate of 2.9 percent as of June 2024. It has a GDP per capita of USD 68,900. The business infrastructure is also well-developed with a top-notch financial system. The World Bank has placed Denmark in the first place for its ease of doing business.
Ireland
Over the years, Ireland has climbed up on the IMD World Competitiveness Rankings from 11th in 2022 to 2nd place in 2023. They have still held the top spot among the other competitive economies with a fourth place in 2024.
Ireland’s low corporation tax rate of 12.5 percent on active business income, attracts a lot of investors. Ireland has a high GDP per capita of USD 106,060 making it one of the wealthiest countries. The high GDP is slightly over the GNP due to the number of multinational firms here.
Ireland also has a pro-business environment. One other major factor at play is their access to the European Union and their insanely low unemployment rate of only 4.8 percent as of October 2023.
Hong Kong SAR
Hong Kong ranks fifth on this list. This is because it is a well-developed free market economy. The taxation in Hong Kong is low as it is independent from mainland China.
Not only that, Hong Kong is characterized by nearly free port trade and an international financial market. Another key factor at play is that there is no fixed interest rate. The interest rate is determined by individual banks according to the market. Moreover, the currency of Hong Kong, the Hong Kong dollar, is pegged to the US dollar and is legally recognized by three major international banks. The GDP per capita here is USD 53,000 indicating that it is one of the Asian countries with a high cost of living.
Sweden
Sweden ranks sixth on the competitive scale. It is the third European country on this list. Sweden owes its high ranking to multiple reasons.
One of the major foundations of Sweden’s prosperity is its foreign trade. In 2022 alone, Sweden exported products with a net worth of USD 194 billion. This has made Sweden an alluring country for foreign direct investment. Not only that, Sweden has caused the birth of many unicorns (companies that became valued at over USD 1 billion before being listed). Some prominent names are King, Mojang, Spotify, and Klarna. Sweden’s GDP per capita is USD 58,530 making it one of the wealthier countries.
UAE
The UAE is one of the major players in international trade.There are several factors that has caused it to climb up three ranks from 10th to 7th. .
It is a globally free-market economy. The UAE has also been the top export market in the Middle East for the US since 2009. Its economy is thriving on its oil and natural gas reserves. The evidence to this is an export of USD 425,160 million over an import of USD 347,529 million, leading to a huge profit margin.
The GDP per capita in UAE is USD 53,707 over a global average of USD 13,138. This indicates that this is a wealthy nation with a high cost of living.
Taiwan
Even though Taiwan has gone down from 6th place in 2023 to 8th place in 2024, it has managed to hold a spot in the top 10 most competitive economies.
The first advantage is the availability of cheap labor which leads to low unemployment rates of 3.39 percent as of June 2024. Taiwan is also one of the biggest semiconductor manufacturers, which has helped them claim a whopping 63 percent of the global market. This has made Taiwan one of the Asian countries with high income, having a GDP per capita of USD 34,430.
Netherlands
The Netherlands has gone down from 5th place in 2023 to 9th place in 2024. It still managed to rank amongst the top 10 most competitive economies.
The Netherlands has its grasp on multiple factors be it labor, innovation, or even networking. The low unemployment rate of 8.4 percent is a result of the country’s investments in education and training. When it comes to networks, Europe’s most high-paying markets are just a 24-hour drive away from Amsterdam or Rotterdam. The GDP per capita here is USD 63,750 which indicates that this nation is well off.
The decline can be attributed to the cluttered legislation which often obstructs the construction of favorable infrastructure.
Norway
Norway has pushed through the ranks from 14th in 2023 to 10th in 2024. Several factors have helped it grow, with one being the show-stealer.
In Norway, its natural resources serve as a foundation for its flourishing economy. This country possesses vast oil and natural gas reserves in the North Sea. It has made NOK 1200 billion from the export of crude, condensate and natural gas in 2023 alone. This contributes to 62 percent of total revenue earned from exports. Norway’s GDP per capita is USD 94,660 which indicates a high standard of living.
Qatar
Qatar has climbed up the ranks from 12th place in 2023 to 11th in 2024. They have several factors at play here, with one being their trump card.
Just like Norway, natural gas and oil are the pillars upholding Qatar’s economy. This accounts for 70 percent of their government revenue and around 85 percent of the export revenue. In 2022 alone, Qatar exported a total of USD 119 billion, which goes to show how much their economy thrives on exports.
Qatar is also the world’s third-largest natural gas reserve and second-largest exporter of natural gas. Qatar’s GDP per capita is USD 81,400 which indicates a high cost of living.
Moreover, the unemployment rate in Qatar, at 0.13 percent, is nearly close to zero. This proves how successful and competitive their economy is.
USA
The USA has declined from holding the 9th place in 2023 to 12th place in 2024. Even though there has been a decline, there are several factors that have kept the US ahead of many other countries in the world.
The US is one of the largest exporters in the world. In 2022, the US exported a total of $1.95 trillion making it the second largest exporter in the world. Moreover, they have proper transportation facilities and state-of-the-art infrastructure.
According to the CMS infrastructure index ranking, as of 2021, the US stands in 4th place when it comes to infrastructure. Moreover, according to the World Economic Forum, the USA ranks first in three major business dynamism, labor markets, and financial systems. The US has a GDP per capita of USD 85,530 which indicates that it does have a high cost of living.