Measuring Competitiveness and It’s Effect on Economies
The World Economic Forum’s Global Competitiveness Report is one of the most widely used measures to assess an economy’s competitiveness. It uses a wide array of measures to evaluate competitiveness, defined as the set of institutions, policies and factors that determine the level of productivity of a country. Such measures include the quality of its institutions, infrastructure, macroeconomic environment, educational system, and financial markets, among others.
Owing to the strong growth in the ASEAN region, Southeast Asian economies have done very well in this index. Except for Cambodia and Lao PDR, all ASEAN countries for which data are available place in the top half of the ranking with multiple countries making significant gains from where they were five years ago. Given the strong macroeconomic environment and skyrocketing investor interest in the region, ASEAN countries are poised to continue to grow at astonishing rates for years to come.
Here, in reverse order, are the top 5 most competitive ASEAN nations for 2017:
5) Brunei Darussalam (46th globally)
Brunei (along with Indonesia) was one of the Southeast Asian economies that made the largest strides from last year, jumping 12 places to enter the top 50 of the global competitiveness ranking. Bolstered by good rankings in health and primary education (31st), institutions (40th), and macroeconomic environment (45th), Brunei continues to rank as one of the more competitive economies in ASEAN. However, its 46th place ranking in 2017 is actually 18 spots down from its 28th place finish from 5 years ago. The country continues to be dragged down by its small market size (110th), lack of business sophistication (92nd), and absence of innovation (80th).
4) Indonesia (36th globally)
Indonesia (along with Brunei) was the other big gainer for ASEAN in this year’s ranking, rising five spots from the year before to finish at 36th in 2017. Anchored by its huge market size of 260 million people (9th), strong macroeconomic environment (26th), innovation (31st), business sophistication (32nd), and well-developed financial markets (37th), Indonesia continued its meteoric ascent in which it has established itself as ASEAN’s biggest economy. All is not rosy, however, as Indonesia continues to be plagued by inefficient labour markets (96th), sub-par quality in health and primary education (94th), and poor technological readiness (80th).
3) Thailand (32nd globally)
Thailand has managed to hold the fort despite a period of instability following the death of King Bhumibol Adulyadej, rising two places to finish 32nd in 2017 after finishing at 34th last year. This also represents a gain of 6 places from 5 years ago in 2012, when the country finished at 38th. With its 9th place global ranking in macroeconomic environment — the highest in all of Southeast Asia — and 18th place rank in market size, Thailand continues to solidify its position as a premiere economy in ASEAN. Unfortunately, the economy continues to be bogged down by poor rankings in health and primary education (90th) and institutions (78th) in which the state suffers from repeated periods of political unrest and social instability.
2) Malaysia (23rd globally)
Malaysia continues to be a star performer among developing countries in ASEAN, ranking 23rd in the world in competitiveness, up two spots from its 25th place finish a year ago. This is unchanged from its similar 25th place ranking five years ago in 2012. With high ratings across the board in the competitiveness report’s three sub-indexes — basic requirements (24th), efficiency enhancers (24th), and innovation and sophistication factors (21st) — Malaysia stand out as the top developing economy in ASEAN. Its areas of improvement include higher education and training, where it ranks 45th, and technological readiness, where it is 46th.
1) Singapore (3rd globally)
Singapore is by far the most competitive economy in ASEAN and one of the most competitive in the world. It ranked 3rd globally in 2017, behind only the United States and Switzerland, and ahead of other Asian powerhouses like China and Japan. This, however, is actually slightly down from its 2nd place finish in both 2016 and 2012. Nevertheless, with its top-tier higher education, training and goods market efficiency (1st in the world), not to mention, its world-class institutions and infrastructure (2nd in the world), Singapore continues to shine as the standout performer in Southeast Asia. Unfortunately, the economy’s potential continues to be held back by its diminutive market size (35th) and pedestrian ranking in macroeconomic environment (18th) and business sophistication (18th).
Written by: Uriel Galace
Uriel is a Foreign Affairs Research Specialist at the Center for International Relations and Strategic Studies, a think tank housed in the Philippines’ Department of Foreign Affairs.
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