So, after slipping from the top for about four years, Singapore is back on top as the most competitive country in the world for 2024 in the International Institute for Management Development (IMD) World Competitiveness Ranking 2024.
Competitiveness? Singapore? Yeah, you can act surprised now.
It has been a bit of a roller coaster since we last held the top spot in 2020, but we’ve climbed back up, leaving Switzerland and Denmark trailing in second and third places.
The IMD World Competitiveness Ranking is basically like a report card for countries, evaluating how well they’re doing in terms of economic performance, government efficiency, business efficiency, and infrastructure.
This year, Singapore outperformed 66 other economies, which is no small feat, but in hindsight makes quite a lot of sense if you grew up here.
“Singapore’s performance marks a return to form; last occupying first place in 2020, it then fell to fifth, third, and finally fourth in the following years, while Denmark and Switzerland performed a tussle for power over the top spot,” said the IMD.
A Closer Look at the Numbers
Besides competitiveness, Singapore shone brightly in several other areas. We ranked high in business efficiency and government efficiency, securing first and second place in both categories respectively.
Business efficiency is all about how well companies are performing in innovative, profitable, and responsible ways, while government efficiency examines how conducive government policies are to competitiveness.
Our labour market and management practices also deserve a special shoutout. We jumped three spots to take the top position for the labour market and climbed 21 spots to rank second in management practices. This means our workforce is highly skilled and adaptable, and our management strategies are top-notch.
Technological infrastructure? Nailed it too! We moved up from ninth to fourth place in this area. With all the high-speed internet, advanced tech tools, and smart city innovations we have, it’s no wonder we did so well here.
However, not everything is perfect. One major area where Singapore fell behind is the cost of living (*laughs in broke*). We ranked 62nd out of 67 for prices, with things like rental prices, cost of transport, and health expenditures being pretty steep.
Associate Professor Jamus Lim from Essec Business School pointed out that while we have an efficient government and great infrastructure, the high cost of living remains a primary challenge for policymakers as they impact everything from rental costs to transport, and, in turn, affects overall confidence in the economy.
Professor Lawrence Loh from NUS Business School added that high prices are somewhat expected in a land-scarce country like Singapore. But with regional economies catching up, we can’t afford to sit on our hands and have to keep pushing to stay ahead.
Our ranking for real GDP growth per capita and total public expenditure on education has also fallen, meaning that our economy is not growing as fast per person as it used to, and we’re spending less on education relative to other countries.
The report also noted that there are emerging challenges, such as the need to support employees in reskilling and businesses in transformation, especially with the rise of artificial intelligence. This is crucial for staying competitive in the future.
What Exactly Does Being “Competitive” Mean?
So, what makes Singapore so competitive? According to NUS’ Professor Loh, it’s our strong policy and cultural aspects.
In particular, our labour market excels in areas like remuneration management, worker participation, and attracting foreign talent. We also have a flexible and adaptable attitude towards globalisation, which supports our competitiveness.
But, Professor Lim points out, wage growth here has barely kept pace with overall inflation. This means that even though people might be earning more, their purchasing power hasn’t really increased along with it.
He suggests that for real wages to rise and offset this loss, productivity needs to improve. This could happen (hopefully) with a broader adoption of artificial intelligence in the economy.
The IMD report also highlighted that ongoing global issues, like US-China tensions and geopolitical conflicts, pose challenges to economies, as they can lead to supply-chain disruptions and higher costs for implementing new technologies.
Arturo Bris, the centre’s director, said the ranking serves as a benchmark for countries to measure their progress and identify areas for improvement. It also aims to support global goals like the United Nations’ Sustainable Development Goals (SDGs).
A common misconception one would have about the IMD survey is that larger economies would yield better results, but on the contrary, one key finding from the IMD ranking is that size does not matter when it comes to economic competitiveness, as many of the top spots are held by smaller economies.
Switzerland and Denmark, for example, have consistently performed well with the former moving up a spot from third to second place this year, thanks to better economic performance and business efficiency.
Denmark, on the other hand, slipped to third from first place due to a slight decline in economic performance. But researchers say this drop is insignificant as Denmark remains one of the most competitive economies globally.
Ireland, which was second in 2023, fell to fourth place in 2024.
Singapore’s return to the top of the IMD World Competitiveness Ranking is a testament to our strengths in government and business efficiency, as well as our technological infrastructure.
However, high living costs and other challenges is a cold reality check that there’s always room for improvement.
As Singaporeans, it is a proud but scary moment as it also signals the need to keep pushing forward to maintain our competitive edge, and stay afloat in this crazy day and age.