Swiss economy is the most competitive in the world

Switzerland is the world’s most competitive economy for a ninth straight year, the Geneva-based World Economic Forum said on Wednesday.

Since suffering a rare blip in 2008, when it was nudged into second place by the United States, the Swiss economy has maintained an efficient but unshakeable grip on the top spot in the WEF annual ranking .

WEF economist Thierry Geiger said Switzerland had a virtuous circle of infrastructure, institutions and education, but at the heart of its success was the way it created and used talent.

“That is really the secret of Switzerland, this ability to innovate, supported by a whole range of enabling factors,” he said.

Besides Switzerland, the top 10 remained the same as a year ago, although there was some shuffling of the order. The United States climbed over Singapore into second place, and Hong Kong jumped three places to sixth, leapfrogging Japan in ninth spot.

However, after almost a decade at the top, Switzerland is at risk from complacency and populism. The ageing population could undermine the innovation miracle by shutting the door to foreign talent in one of the referendums that make Swiss law, he said.

“We see a proliferation of such referendums on everything, some of them are kind of dangerous, they could really endanger and jeopardise Switzerland’s prosperity,” Geiger said.

The World Economic Forum, the same organisation that runs the Davos meeting of global powerbrokers each January, bases its rankings on a dozen drivers of competitiveness and a survey of business leaders.

“Global competitiveness will be more and more defined by the innovative capacity of a country,” Klaus Schwab, WEF founder and executive chairman, said in a statement.

Though Israel ranks 16th overall, the WEF finds that it’s the third most-innovative economy. This hasn’t gone unnoticed as Silicon Valley venture capital pours into the economy, along with Chinese investments.

Britain slipped one place to eighth. It has not yet dropped in the rankings because of its Brexit negotiations with the European Union but it is expected to do so, the WEF said.

China inched up one place to 27th, well ahead of 38th-ranked Russia and India, which was in 40th position.

The wooden spoon went to Yemen, a poor country further devastated by civil war, economic collapse, cholera and near-famine conditions, which was in 137th place.

The report also warns that individual national economies need to do more to protect against potential shocks from innovation and automation. The WEF suggests that labor-market flexibility should be combined with more protections for workers’ rights and efforts to reduce inequalities. Policy makers, especially in emerging markets, should do more to spread the benefits of technological progress. The WEF fears that if the world faces another financial shock, higher private debt in developing countries, slow progress on regulation in Europe, and plans to rollback regulation for US banks would leave the global economy greatly exposed.

The top 10 countries on the Global Competitiveness Index:

1. Switzerland
2. United States
3. Singapore
4. Netherlands 
5. Germany
6. Hong Kong
7. Sweden
8. United Kingdom
9. Japan
10. Finland