Denmark, Ireland and Switzerland have been named the top three among 64 economies measured for their global competitiveness in the 2023 IMD World Competitiveness Ranking, published today by the World Competitiveness Center for the 35th consecutive year.
Denmark maintained its grip on first place from last year, when it enjoyed a momentous inaugural rise to the top, Ireland made a remarkable leap from 11th to take second place, and Switzerland held its nerve in third, after dropping from second place in 2022 and first place in 2021.
All three are small economies that make good use of their access to markets and trading partners – as does Singapore, which came fourth.
Commenting on the results, Professor Arturo Bris, Director of the WCC, said, “An increasing number of countries are pursuing their own interests. We are seeing winners and losers in a context in which multiple crises are overlapping and the world is increasingly divided between protectionist and open-trade economies.”
Christos Cabolis, the WCC’s Chief Economist, explained, “Navigating today’s unpredictable environment requires agility and adaptability. Countries which excel are building resilient economies, such as Ireland, Iceland, and Bahrain. Their governments are also able to adapt policies based on current economic conditions in a timely fashion. The UAE, Saudi Arabia, Qatar, and Singapore are also key examples of this.”
The top 3 in detail
Denmark’s top position is based on its continuous achievements across all four competitiveness factors measured. It remains first in business efficiency and second in infrastructure, and shows slightly improved results in government efficiency, going to fifth from sixth.
Another factor measured in the ranking is economic performance. Ireland’s sharp rise is largely the result of its stellar performance in this factor, where it rose from seventh to first.
Switzerland retains third place thanks to its strong performance across all competitiveness factors measured. It remains first for government efficiency and infrastructure, ranks seventh in business efficiency (a decline from fourth), and improves in economic performance (up to 18th from 30th).
Dust settling from the pandemic
The 2023 results also highlight how economies late to open up after the COVID-19 pandemic are starting to see improvements in their competitiveness (e.g., Thailand, Indonesia and Malaysia). Those early to open up are now witnessing declines (such as Sweden and Finland).
Europe excelled in the ranking, as in 2022, with five economies in the top 10. Apart from being smaller, the most competitive economies also tend to have strong and efficient institutions. “A country’s ability to generate prosperity for its people is a key determiner of success. It’s not what China does yet and it’s not what the US even does fully yet,” Bris explained.
In the top 10, Singapore dropped one position to fourth, the Netherlands moved up one place to fifth (from sixth), Taiwan, China gained one spot (up to sixth from seventh), and Hong Kong SAR fell to seventh (from fifth). The USA improved one place to ninth, and the UAE went up two places to take tenth.
“A country’s ability to generate prosperity for its people is a key determiner of success. It’s not what China does yet and it’s not what the US even does fully yet”
– IMD Professor Arturo Bris, Director of the WCC
The ranking is a valuable tool for evaluating highly contrasting business environments, for supporting international investment decisions, and for assessing the impact of various public policies. It serves managers and policy makers alike and is an indicator of the quality of life in each country it assesses, for which it depends on the support of a network of 57 local Partner Institutes.
It is based on a mixture of hard data – 164 competitiveness criteria selected as a result of comprehensive research using economic literature, international, national, and regional sources, plus feedback from the business community, government agencies, and academics – and 92 survey questions answered by 6,400 senior executives. Hard data accounts for two thirds of the overall ranking results, whereas the survey data represents one third.
Kuwait is the latest economy to join the ranking, making its début in 2023.