10 Facts about the Global Competitiveness Index 4.0 and 4IR

10 Facts about the Global Competitiveness Index 4.0 and 4IR

The Fourth Industrial Revolution (4IR) has brought fresh opportunities but also new questions about how economies can best integrate technologies for a faster path to broad-based prosperity.

New technology-intensive, high-skilled occupations will be in demand in the future, along with new growth broadly across sectors such as education, health, care, green energy and more. This tech revolution calls for a new approach to industrial policy in the digital age.

What is the Global Competitiveness Index 4.0?

The World Economic Forum is introducing the Global Competitiveness Index 4.0 as a much-needed economic compass, building on forty years of experience of benchmarking the drivers of long-term competitiveness and integrating the latest learnings about the factors of future productivity.

The GCI 4.0 is organised into 12 pillars: institutions; infrastructure; ICT adoption; macroeconomic stability; health; skills; product market; labour market; financial system; market size; business dynamism; and innovation capability.

The Index also introduces a new progress score ranging from 0 to 100, with the frontier (100) corresponding to the goal post for each indicator and typically representing a policy target.

Competitiveness is not a not a zero-sum game between countries—it is achievable for all countries. Below are ten important considerations about future-proofing the path to competitiveness:

1.Competitiveness is not a luxury good. All economies must pursue the drivers of productivity, regardless of their current level of income or current areas of strength if they want to grow faster in the future and build resilience against shocks.

2. Investing in people is good for social andeconomic outcomes.  The health, education and skills of a population are among the key drivers of productivity, particularly in the context of economic and technological transformations.

3. Embracing globalisation in the 4IR goes beyond free trade. Openness remains a fundamental driver for competitiveness. More open economies are more innovative and more competitive. Collaboration across borders is particularly critical for a dynamic innovation ecosystem.

4. Open economies must also embrace social protection. Policies should focus on improving the conditions of those specifically impacted by globalisation through redistributive policies, safety nets, investments in human capital, more progressive taxation, and opportunities to transition to new economic opportunities.

5. Creating an innovation ecosystem goes well beyond research and development. Innovation has become an imperative for advanced economies and a priority for emerging countries. R&D is not enough. Innovation should include the ability of companies to embrace disruptive ideas (US), the attitude toward entrepreneurial risk (Israel), diversity of the workforce (Canada), and flat hierarchical structures in companies (Nordic countries).

6. Technology offers a path to economic leapfrogging but only in combination with other factors. Technology is a vital tool for growth and prosperity, and its allocation and governance are critical. Leveraging technology for economic leapfrogging remains largely unfulfilled. It is vital to provide greater access to ICTs to the majority of populations.

7. Institutions still matter.Weak institutions continue to hinder competitiveness, development and well-being in many countries. Governments must pay attention to both traditional and emerging aspects of the institutional environment as a factor of productivity.

8. Infrastructure and the financial system still matter. The quality and breadth of transport infrastructure (road, rail, water and air) and utility infrastructure lower transportation and transaction costs and facilitate the movement of goods and people. Basic elements of such infrastructure are still missing in many economies, encumbering their competitiveness.

9. In a time of constant change, there is a need for constant agility. Amidst the transformations and disruptions brought about by the 4IR, the adaptability and agility of all stakeholders—individuals, governments, and businesses—will be key features in successful economies.

10. Achieving equality, sustainability and growth together is possible – but needs proactive, far-sighted leadership. There is a worldwide consensus on the need for a more holistic model of economic progress that promotes higher living standards for all, respects planetary boundaries, and does not disadvantage future generations.

Source: World Economic Forum

 

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