Denmark tops Switzerland as world’s most competitive economy
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Something is rotten in the state of… Swiss?
Yes because Denmark – Shakespeare’s land of tumult and regicide – has overtaken the mountainous home of yodeling as the world’s most competitive economy, according to an influential annual survey.
Copenhagen and no Copenhagen
The IMD Business School, based in the Swiss city of Lausanne, has been publishing its global competitiveness ranking for 34 years. Denmark have been flirting with the first stage for five years, moving from 6th to 8th to 2nd to 3rd before this year’s triumph. But, naturally, this begs the question of how a country jumps off a list for what seems like such a vague criteria, competitiveness? It is complicated.
The IMD takes 163 comparable data items that cover the economic performance of 63 countries, then combines them with a survey of senior executives. Arguing that “the competitiveness of an economy cannot be narrowed down to GDP and productivity alone because businesses also have to deal with political, social and cultural dimensions”, the school includes data and survey feedback on infrastructure and education, health and technology, government and fiscal policy, economic performance and trade, and labor markets and business productivity. Denmark blew up Switzerland thanks to one category in particular:
- Sustainability. The Danish government has one of the most ambitious climate change policies in the world, aiming to reduce emissions by 70% in 10 years. According to the OECD, the country has devoted 60% of its COVID-19 stimulus spending to environmental goals, and the nascent wind industry has already become a key source of exports.
- Denmark’s aggressiveness on the sustainability front has led to increased investment flows, boosted infrastructure projects and contained inflation compared to other countries, making supply chains more local. The government estimates the economy grew by 3.8% in 2021, despite the pandemic, and the latest OECD economic survey of Denmark forecasts GDP growth to remain strong at 2.4% in 2022 and 1 .7% in 2023.
Others: Switzerland, number one last year, will have to settle for being ranked the second most competitive economy. Singapore, Sweden and Hong Kong complete the top five. The five lowest ranked countries were Venezuela, Argentina, Mongolia, South Africa and Brazil.
We are number ten: The largest and most important economy in the world, the United States, ranked tenth this year. One wonders what all the executives interviewed had to say about the top tax rate of 52% in Denmark versus 37% in the United States. Their Wall Street offices probably say all that needs to be said.
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