For the first time in nine years, Singapore surpassed the United States and Hong Kong to clinch the title of the world’s most competitive economy, according to annual rankings compiled by Switzerland-based business school IMD.
Speaking to CNBC’s “Squawk Box Asia” on Wednesday, Arturo Bris — director of the IMD World Competitiveness Center — said the Southeast Asian country had been following a simple “recipe for competitiveness.”
Singapore’s immigration laws, advanced technological infrastructure, availability of skilled labor and efficient ways to set up new businesses helped it advance to the top, IMD’s 2019 World Competitiveness Rankings found.
The city-state is “a poster-child for the world economy today, and not surprisingly it made it to the top position this year,” Bris said.
IMD measures a country’s competitiveness using four indicators: economic performance, infrastructure, government efficiency and business efficiency.
Here are the top 10 economies by competitiveness, according to IMD:
- Hong Kong SAR
While the U.S. still ranked first in economic performance, IMD found that the country fell from its top spot as the boost in confidence from U.S. President Donald Trump’s tax policies faded. Higher fuel prices and weaker high-technology exports also hit the economy’s competitiveness.
“Trump’s policies from the competitiveness perspective were good and bad. Good in the sense that low taxes benefit the economy,” Bris said. “But they’re bad in the sense that closeness and avoiding globalization and trade hurts competitiveness.”
“That’s what we saw last year indeed, that after the tax decreases in the United States, the U.S. climbed to the top position,” he added. “This year, on the contrary, we have observed the impact of the trade war.”
Washington has claimed that the uneven playing field and trade imbalances with Beijing has put U.S. companies at a competitive disadvantage — but there should be some nuance to any analysis of that matter, according to Bris.
“We need to distinguish between competition and competitiveness,” Bris said. “Probably, China is hurting the ability of American companies to compete.”
“But China is not hurting American competitiveness, which refers to prosperity, the ability to generate growth in the economy, to create business, jobs, and for people to make a better living,” he added.
With regard to the ongoing U.S.-China trade war, Bris said he “would call it a tantrum in the sense that it is hurting companies in the United States more than in any other country.”
In the Asia-Pacific region, 11 out of 14 analyzed economies either improved or held onto their rankings.
That is partly due to global economic conditions such as the trade war’s effects, which have led companies to relocate some parts of their supply chains out of China and into Southeast Asian countries, Bris said.
However, Bris added that the jump in competitiveness is also due to beneficial domestic policies.