Malaysia Climbs Up One Notch on the WEF Competitiveness Index
Malaysia climbed one spot to 25 on the World Economic Forum’s (WEF) 2018 Global Competitiveness Report (GCR) that came out in October.
Over the last ten years, Malaysia has maintained a consistent ranking around the low to mid-20s, with the best showing in 2015 at 18th place.
This year’s report focuses on how well economies adapt to the Fourth Industrial Revolution (4IR), the digital revolution growing since the second half of the last century that has become characterised by a fusion of technologies blurring the boundaries between physical, digital, and biological.
Rethinking drivers
Thierry Geiger, Head of Research and Regional Impact, Future of Economic Progress at the WEF explains on the official website: “Productivity is the single most important driver of growth in 2018. With the Fourth Industrial Revolution in full swing, there is a need to rethink the drivers of competitiveness and therefore of long-term growth.
“Those new drivers include adaptability and agility of all stakeholders, including the governments. To what extent are they able to embrace change and adapt to change and upgrade their economies?”
The US topped the CGR for the first time in a decade, with Germany, Switzerland and Japan completing the top five.
Yet Malaysia has maintained its competitiveness in the face of the emphasis on the 4IR which naturally favours advanced countries.
“For instance, high-income economies make up the entire top 20 and only three non-high-income economies feature in the top 40: Malaysia (25th), China (28th), and Thailand (38th),” the report said.
Malaysia also fared well in Financial Systems (15th) and Business Dynamism (19th), but remains weak in its Labour Market (70th) and Product Market (64th).
Holistic approach to competitiveness
WEF has been measuring competitiveness among countries since 1979. The latest edition sees 140 countries evaluated against 98 indicators to measure national competitiveness defined as ‘the set of institutions, policies and factors that determine the level of productivity’.
The CGR revealed how crucial adaptability of all stakeholders - individuals, governments and businesses - is to successful economies, adding that Malaysia ranked ninth among future-ready nations.
WEF said the relationship between future-preparedness and income level was positive but extremely loose, with Malaysia scoring significantly higher than Greece, Italy and Belgium.
In South-east Asia, Thailand was 38th with 67.5 points, Indonesia 45th (64.9 points), and the Philippines 56th (64.1 points).
Due to the focus on the IR4, the report noted the advantage that could be accrued through early adoption of policies embracing this shift towards automation.
“For instance, high-income economies make up the entire top 20 and only three non-high-income economies feature in the top 40: Malaysia (25th), China (28th), and Thailand (38th),” the report said.
Macroeconomic stability in Malaysia
Malaysia performed best in Macroeconomic Stability, in which it was rated 1st among countries included with a perfect score of 100.
The report also cited the difference between Belgium and Malaysia to indicate that competitiveness was just one factor in determining a country’s economic success, noting that both have comparable scores in the GCR but the former boasted a median income that was three times higher.
“As for economies relatively far below the trend line — including Malaysia, Mexico, Indonesia and India — the results suggest their competitiveness performance, if maintained, will promote higher and sustained levels of income in the future,” the report said.
“Competitiveness is neither a competition nor a zero-sum game - all countries can become more prosperous,” Saadia Zahihi, Member of the Managing Board and Head of the Centre for New Economy and Society, said on the WEF website.
“With opportunities for economic leapfrogging, diffusion of innovative ideas across borders and new forms of value creation, the Fourth Industrial Revolution can level the playing field for all economies. But technology is not a silver bullet on its own. Countries must invest in people and institutions to deliver on the promise of technology.”
