Switzerland is the third most competitive nation in the world according to the 2012 global competitiveness report published on Thursday by the Lausanne-based IMD business school. After climbing two spots it has become the European leader.
Hong Kong came out top in the 24th edition of the IMD’s annual publication ahead of the United States. Switzerland, which recorded its first ever podium finish after dropping from fourth to fifth last year, was followed by Singapore and Sweden.
“Switzerland’s progression is also due to the international economic situation,” IMD economist Ann-France Borgeaud Pierazzi told Geneva’s Le Temps newspaper. “Europe is suffering from the crisis. Asia is slowing down, which explains why we are ahead of Singapore in 2012.”
The report’s authors said that Switzerland distinguished itself thanks to its political stability -best of the 59 countries surveyed – and its management of public finances, in which it ranked fourth, an improvement of 28 places over 2011. The debt brake introduced in 2003 was a factor in this result, particularly with the rest of Europe suffering from the financial crisis.
Switzerland was also given high marks for its low unemployment and flexible job market. Opinion leaders surveyed for the report placed the country’s skilled workforce and competitive tax regime and predictability among their top attractiveness factors.
The Swiss also ranked highly for their infrastructure, finishing only behind the US in terms of human, technological and scientific resources available for business.
Concerns
Business leaders were also positive about the Swiss National Bank’s policies, saying that they had a favourable impact on economic development. There were however strong concerns about the strength of the franc, with Switzerland ranked 57th out of 59 countries on this criteria alone.
Other perceived threats to the Swiss economy are the possible relocation of production as well as research and development facilities abroad. Competitiveness is still boosted though by the legal and regulatory framework and strong productivity.
According to the authors, Switzerland is competitive because it has diversified into niche products and services that face less international competition. But it remains strongly dependent on Europe, its main trading partner, and is vulnerable to falling demand on the continent.
Globally speaking, Hong Kong, Switzerland, Singapore and Sweden “make up a leading group characterised by their dynamism in terms of exports, attitudes, and values favoring openness and exchange”.
The US ranks for its part highly because its excellent infrastructure and the decisive influence it has on markets.
“US competitiveness has a deep impact on the rest of the world because it is uniquely interacting with every economy, advanced or emerging. No other nation can exercise such a strong ‘pull effect’ on the world,” said Stephane Garelli, director of IMD’s World Competitiveness Center, in the report.
The other report
In comparison, the World Economic Forum’s earlier Global Competitiveness Report for 2011-2012 stated that Switzerland is the world’s most competitive country,
The report, published last year, cited Switzerland’s technological capabilities and the effectiveness of its labour market as reasons for its good results in the overall rankings.
The report found that Switzerland was particularly good at translating research into new products and stated that Switzerland ranked seventh worldwide for patenting. In terms of infrastructure, Switzerland ranked fifth.
The IMD World Competitiveness report assesses the competitiveness of 59 economies on the basis of 329 criteria (two-thirds of which are composed from statistical indicators and one-third from the perceptions of opinion leaders).
This approach argues that growth, wealth or economic size are not the only elements ensuring the competitiveness of a country.
It includes elements such as human skills, an entrepreneurial spirit or a business-friendly environment that are also integral to success according to the report’s authors.