Ireland gains positions among the most competitive countries in the world. The nation jumps from 11th to 2nd place in an index that Denmark continues to dominate in 2023, according to the World Competitiveness Ranking prepared by the Swiss business school IMD. It is the one that gains the most ground in the top positions due to its agility and adaptability in the current unpredictable environment with a robust economy, it is argued. Spain, meanwhile, remains stuck in the middle of the table.
Headquarters of technological giants and always questioned in Brussels for its tax attractiveness for multinationals, Ireland’s push after the pandemic serves as an engine to gain competitiveness. “Its strong rise is largely a result of its strong achievements in economic performance,” the report noted. This year the sustainability of their accounts, business investment or employment metrics especially improves. Despite this, in the first quarter it was the euro zone economy that fell the most and would not aspire to seize the throne:
“Ireland’s ranking represents a temporary increase that is not sustainable. It is fueled by the arrival of significant international capital and investment flows, as well as by its low-tax policy,” IMD sources point out to La Vanguardia.
The ranking reviews 164 metrics divided into economic evolution, government efficiency, business efficiency and infrastructure. Ireland dominates globally in at least one metric from each group. It is a leader in investment incentives, in attracting talent, in international image, in exports of ICT services… Experts point out that its attraction lies in a qualified labor force, good educational levels, legal certainty, a competitive tax regime and a business friendly environment. But it falters in others. “The situation is not sustainable due to international agreements (on taxation) and also to the domestic problems that are being generated, especially in the field of housing, since it causes shortages and an increase in prices that affect the population and the levels of prosperity.
In a year marked by inflation or geopolitical risk, there are no big news in the rest of the noble zone. Small countries consolidate as the most competitive and Denmark repeats in first place. It weighs its business, government or infrastructure efficiency and good performance in all the categories that are analyzed.
Switzerland moves from second to third place, Singapore drops one to fourth place and the Netherlands improves one place to fifth. USA moves from tenth to ninth place.
The report points out that the most competitive tend to be more open economies, less protectionist. “The most successful ones tend to be smaller, have a good institutional framework that includes strong education systems, and good access to markets and business partners.”
The planet faces several overlapping crises. Covid, war in Ukraine, political fragmentation… Regarding the latter, “one of the main effects is that a growing number of countries pursue their own interests,” analyzes Arturo Bris, director of the IMD World Competitiveness Center. Singapore, Saudi Arabia or India serve as an example.
The panorama leaves winners and losers. The first are those that can adapt to the environment and have a solid economy such as Ireland, Iceland or Bahrain, or that have governments that can adapt their economic policies to the moment, such as the United Arab Emirates, Saudi Arabia, Qatar or Singapore. Belgium is another of the winners, jumping 8 places to 13th.
Among the losers, big countries like Germany, the United Kingdom or France worsen. Berlin loses 7 places and falls to 22nd, London loses 6, to 29th, and Paris goes from 28 to 33.
Where inflation is hitting more, competitiveness suffers more, it is assured. A clear case is Latvia, dependent abroad for energy and raw materials, which went from 35th to 51st place in the biggest drop on record.
Spain repeats in position 36 out of 64. It is a constant in recent years only interrupted by 39th place in 2021, after the pandemic. The position is explained by an improvable economic performance (position 32) and business efficiency (37). “Productivity and efficiency are declining and the labor market remains stagnant. The efficiency of the government continues to be a great weakness. The institutional framework and business legislation also continue to decline,” it detailed in a note.
Without dominating any metric at a global level, Spain is particularly badly ranked in the unemployment rate, in position 61 out of 64; the low effectiveness of unemployment legislation (62); society’s understanding of the need for economic and social reforms (60) and scientific research legislation (56).
On a positive note, “strengths include high secondary school enrollment ratios, life expectancy, exports of commercial services,” says José Caballero, senior economist at the Center for Global Competitiveness.
Among the duties for this year, an “efficient investment of European funds is recommended, reinforcing the productive system and configuring a more resilient economy”, “avoid unnecessary indexation to inflation”, “reduce the tax burden and generate a stable regulatory environment for companies”, “rethinking employment policies within a framework of social dialogue” and “strengthening the industry by rethinking distribution chains”.
