Principles of competitiveness of the states of GFCC Global Federation of Competitiveness Councils

2020: Only the chosen economies are ready to long-term prosperity due to public services, "green" investments and digitalization

Nearly a year later later began pandemics of a koronavirusny infection of COVID-19 the economic downturn provoked by this event still makes considerable impact on economy and the social sphere. Any country could not avoid negative effects, however the countries with the developed digital economy and digital skills of inhabitants, the powerful system of social protection and the previous experience of fight against epidemics cope with pandemic effects for the economy and citizens better. Such data are provided in in the next release of the Report on global competitiveness of "The country at way to an economic recovery" prepared by the World Economic Forum and published on December 16, 2020.

In process of revival of global economy the countries have opportunities to be beyond the current anti-recessionary agenda and to be focused not only on recovery of pre-crisis rates of economic growth. In the Report the way to these opportunities is specified.

In special release of December, 2020 priorities of post-crisis recovery and the subsequent acceleration of economic growth are stated, estimates of factors of efficiency of fight against a pandemic and the analysis of what countries it is better than others are given prepared for transformation in the economic systems which are harmoniously combining the purposes of "performance", "the person and his requirements" and "planets".

"The generalized assessment of starting positions of Russia makes 50.4 points of 100 greatest possible is more, than in India and also at some Latin American (Argentina, Mexico), East European (Poland, Hungary, Slovakia) and the Mediterranean countries (Greece, Turkey), but it is much less in comparison with the G7 countries (the USA, Canada, Great Britain, France, Germany, Italy, Japan) or with China", – Alexey Prazdnichnykh, the coordinator of the program of the World Economic Forum on competitiveness of the countries in Russia, the partner of Strategy Partners, the chief executive of the Eurasian institute of competitiveness said.

As recognition of an ekstraordinarnost of events of 2020 and also united global efforts on fight against crisis of public health care and its social and economic effects, preparation of the Global index of competitiveness and calculation of rating of the countries for 2020 were suspended. In 2021 the next release of the Report will use rating as the updated system of reference points for management of future economic growth again.

What necessary conditions for future economic transformation?

In the report ways of recovery and conversion in four spheres are considered: favorable conditions and incentives, human capital, markets and innovations.

• Creation of the favorable environment and incentives: In the report it is recommended that the governments gave priority to improvement of providing public services, management of a public debt and expansion of scales and the impacts of digitalization. In more long term more progressive taxation, upgrade of engineering infrastructure and creation in general of more eco-friendly infrastructure is recommended.
• Conversions in the field of a human capital: In the report the idea of gradation from plans for mass layoff to a combination of anticipatory investments into new opportunities in labor market, scalings of programs of retraining and advanced training and also creation of the systems of social protection promoting economic revival is defended. In more long term heads should work on updating of contents of educational programs, reforming of the labor law and improvement of use of new technologies of talent management.
• Conversion of the markets: Though from the moment of the last financial crisis financial systems became much stabler, they should be more inclusive, and the growing market concentration and increase in barriers to movement of goods and people can interfere with conversion of the markets. In the report it is recommended to enter financial incentives for the companies for "green" and inclusive investments and to update competition acts and antimonopoly mechanisms.
• Conversion of the innovation ecosystem: Despite blossoming in the last decade of the culture of an entrepreneurship, creation of new businesses, disruptive technologies and also products and services on the basis of these technologies, stopped. In the report it is recommended to expand the state investments into research and development, at the same time encouraging them in the private sector. In more long term of the country should support creation of "the markets of tomorrow" and motivate firms to recognition of personal variety for the sake of increase in creative potential and competitiveness.

What countries it is better than the others are ready to economic conversions?

Concept of transformation of economy rather new, and the volume of data, available to its comprehensive assessment, is limited. Data from 37 countries were compared with 11 priority directions stated in the Report. This analysis allowed to establish that though any country is not ready to recovery and economic conversions for all 100%, some countries are in more advantageous position. By the estimates given in the report, 10 percent increase in indicators of readiness can lead to increase in GDP of these 37 countries combined for $300.000.000.000 (300 billion US dollars). However, these priority directions should be considered in terms of their potential contribution to acceleration of economic growth, achievement of inclusivity and stability.

The countries which are best prepared for economic conversions are given in the table below. Important comments on effects of limited data availability are provided in the Report.

Estimates were given to positions of Russia only in nine of eleven directions.

"The Russian economy received positive assessment in three directions, – Alexey Prazdnichnykh told. – First, in comparison with much developed and developing countries labor market in Russia at the same time rather flexible and at the same time provides to workers a certain social protection. Therefore in the Regulation of Labour Market and Organization of a Social Security System direction Russia takes the 12th position from 37 countries. Also Russia in some aspects can be an example of transition to more progressive taxation, review of approaches to taxation of the corporations financially secure and working class at the national level and one of initiators of such transition within the coordinated international cooperation. Therefore estimates in this direction also relatively high (the 20th place from 37 possible). The same can be told about implementation in business of the principles of variety, justice and inclusivity for the purpose of increase in creative potential of employees – here also rather an appreciation: 20-21 places from 37 possible".

Weak positions at Russia, first of all, in the first direction (37/37): provide increase in effective management of public institutions, use of long-term vision and strengthening of public trust due to fair provision of services for citizens worked well in Russia less so far, than in other countries. The same situation in the second direction (37/37): Russia less other countries of rating is ready to upgrade infrastructure for the purpose of the accelerated transformation in power and also expansions of access to the electric power and digital technologies. A similar situation and in the eighth direction (37/37): in Russia it is more, than in other countries, it is necessary to update the principles of protection of the competition and antimonopoly regulation, taking into account requirements of the Fourth industrial revolution, providing access to the markets both on national, and at the international level.

In the lower part of rating of a position of Russia in the fourth direction (28/37): update contents of educational programs and increase investments into development of skills which are key for future jobs and the markets of "tomorrow". Also relatively a situation, adverse for Russia, in the seventh direction (29/37): stimulate increase in the financial investments in long-term investments, in achievement and strengthening of stability and inclusivity. Similar to and in the tenth direction (28/37): stimulate and expand long-term investments in researches, innovations and inventions which can create the new "markets of tomorrow".

What aspects of competitiveness promoted stability of economy in the period of a pandemic?

The countries with the developed digital economy and digital skills were more successful in maintenance of economic growth during remote work. In particular, good results were shown by the Netherlands, New Zealand, Switzerland, Estonia and the USA.

The countries with the reliable systems of social support during crisis, such as Denmark, Finland, Norway, Austria, Luxembourg and Switzerland were well prepared for rendering a necessary assistance to those who could not continue work. The same way, the countries with the developed financial sector, such as Finland, the USA, the UAE and Singapore, could provide providing borrowed funds to small and medium business with bigger ease and prevent mass bankruptcies.

The countries which could plan and coordinate successfully actions in the field of health care, tax and social policy achieved rather great success in mitigation of the consequences of crisis. Among them there are Singapore, Switzerland, Luxembourg, Austria and the UAE.

Separate examples show that the countries which were earlier already facing coronavirus epidemic (such as SARS is atypical pneumonia), located more perfect action plans on a case of similar crisis, protocols of treatment and the technology systems (for example, the Republic of Korea, Singapore) and could constrain epidemic more successfully, than other countries.

How during crisis did business activity change?

In the countries with developed economy leaders of business became witnesses of the amplifying monopolism, noticeable decrease in the competition in the field of services, reduction of cooperation between the companies and decrease in availability of skilled workers in labor market as transition to remote work with use of digital technologies accelerated. Active reaction of the governments to changes, big unity of collectives in the companies and increase in availability of a venture capital became the positive moment, according to heads of the companies.

In emerging countries and developing countries heads noted growth of the costs of business connected with crime and violence, decrease in level of independence of the judicial system, further decrease in the competition and growth of monopolism and also decrease in trust to political leaders. They were also positive to crisis response measures of the government, noted more active cooperation in collectives in the companies and growth of availability of a venture capital. They also noted growth of opportunities for involvement of talented specialists probably partly at the expense of the accelerated penetration of digital technologies in labor market.

"During this period of deep uncertainty, crisis in the field of health care and economic downturn force to rethink cardinally the economic growth and its communication with effects for people and for all planet. Politicians have a remarkable opportunity to seize this moment and to create such new economic systems which will be highly productive with a simultaneous growth of shared prosperity and ecological sustainability", - Saadiya Zakhidi, the managing director of the World Economic Forum noted.

Key outputs on positions of the countries:

• Investments into digital infrastructure: Transition to more "green" and inclusive economy should be supported with considerable investments into infrastructure, including expansion of telecommunication infrastructure. For the end of 2020 it is the is best of all Denmark, the Netherlands, Finland and Estonia are prepared for it.
• Eco-friendly economy: Ecologization of economy will demand upgrade of power infrastructure, transport networks and obligations of both the state, and private sectors on expansion and observance of multilateral agreements in the field of environmental protection. Denmark, Estonia, Finland and the Netherlands are best prepared for carrying out economic conversions through infrastructure. Russia, Indonesia, Turkey and the Republic of South Africa treat the least prepared countries.
• Long-term investments: Increase in motivation to the direction of financial resources on long-term investments to the real sector of economy can promote achievement of stability and inclusivity. Finland, Sweden, New Zealand and Austria are prepared better, than other countries with developed economy while the USA, being the largest financial center in the world, are among the least prepared countries.
• More progressive taxation: Transition to more progressive systems of taxation becomes a key factor of economic conversions. On this indicator the Republic of Korea, Japan, Australia and the Republic of South Africa gained the greatest number of points thanks to rather balanced and progressive taxation systems.
• Expansion of providing public services: For increase in level of social protection it is necessary to integrate better education, the labor law and conditions social support and also to upgrade education taking into account requirements of jobs of the future. Germany, Denmark, Great Britain and Switzerland are rather better, than other countries, are prepared for combining adequate labor protection with new models of the systems of social protection. The Republic of South Africa, India, Greece and Turkey are least prepared.
• Incentives for the markets of the future: Stimulation and expansion of long-term investments in researches, innovations and growth of inventive activity can create the new "markets of tomorrow" and stimulate growth. Finland, Japan, the USA, the Republic of Korea and Sweden are better prepared for creation of the markets of tomorrow while Greece, Mexico, Turkey and Slovakia are least prepared.

2019

Factors of global competitiveness of Russia

Poor development of public institutes, insufficiently developed financial system, the low competition in domestic market and lack of significant progress on these factors do not allow Russia to improve positions in ^[1] the countries on the level of global competitiveness. Despite growth on many indicators, Russia, as well as in 2018, took the 43rd place in the next annual Report on global competitiveness prepared by the World Economic Forum with the assistance of the Eurasian institute of competitiveness and support of consulting company Strategy Partners (the leading Russian strategic consultant, enters an ecosystem of Sberbank).

Positions of Russia in the rating of the countries did not change, it remained on the 43rd place, despite growth of absolute value of the index. Improvements this year were reached in the field of implementation of digital technologies, strengthening of the innovation potential, increase in market efficiency of work and macroeconomic stabilization. At the same time estimates of development of public institutes, commodity markets and services and also skills and competences (in particular those which are necessary for the successful competition in the future) worsened that as a result did not allow Russia to improve the positions in rating.

"Asian tigers" became the leaders of the rating: Singapore (the 1st place) and Hong Kong (the 3rd place), the USA in 2019 conceded superiority to Singapore and took the 2nd place. In the top ten also Japan (the 6th place) and the European countries (the Netherlands, Switzerland, Germany, Sweden, Great Britain, Denmark). Among the countries of the Eurasian macroregion Russia has the highest rating of competitiveness, follow Kazakhstan (55) and Azerbaijan (58), both countries for the last year improved the indicators. At the same time all three former Soviet republics of the Baltics advance Russia: Latvia was located on the 41st, Lithuania — on the 39th, Estonia — on 31 places of rating. Among BRICS countries ahead of Russia there is only China with a big separation — on the 28th place. Other participants of informal consolidation, the Republic of South Africa (60), India (68) and Brazil (71), lag behind.

The big amount of the market (the 6th place), stable status of macroeconomic (the 43rd place) and the accelerated implementation of digital technologies (the 22nd place) and also the innovation potential (the 32nd place) are the strengths providing to Russia high competitiveness and leadership in Eurasia. On these factors it significantly advances many other countries which are at the same stage of development of economy. First of all, public institutes (the 74th place), still insufficiently developed financial system (the 95th place) and also the regulated and slabokonkurentny industry markets (the 87th place) treat barriers on the way of increase in national competitiveness. On quality of institutes Russia is flush with other countries of Eurasia, on development of a financial system slightly is ahead of them, and on the level of the competition and quality of regulation of the industry markets lags behind.

"The fourth industrial revolution opens great opportunities for the reproached development, but also creates new risks, including increases in a gap between the countries. The index of competitiveness of the WEF estimates as far as the countries are ready to support performance improvement and sustained economic growth in new conditions. In total for the last 5 years in positions of Russia there were no significant changes: growth with 43rd to the 38th places in 2017, then return to the 43rd place after updating of methodology of rating taking into account new factors of development in 2018" — Alexey Prazdnichnykh, the coordinator of the program of the World Economic Forum on competitiveness of the countries in Russia, the partner of Strategy Partners, the chief executive of the Eurasian institute of competitiveness says. — "Here, as in "Alice in Wonderland" of Lewis Carrol, it is necessary to run at full speed only to remain on site and somewhere to get, it is necessary to run at least twice quicker! To raise the position in rating, it is necessary to increase competitiveness quicker, than other countries, in it and the main intrigue of fight for prosperity consists. Russia has all fundamental premises for more rapid progress in development of key factors of competitiveness - without it it will be difficult to provide worthy economic growth. It is important to strengthen focus, efficiency and synchronization of national projects for achievement of strategic objectives of development of higher level. And competitiveness of economy — one of such purposes"

Principles of global competitiveness

The global federation of councils for competitiveness (GFCC) published the principles of competitiveness in September, 2019. As developers of the document experts of GFCC with assistance of the Eurasian institute of competitiveness (ECI) and consulting company Strategy Partners (Stratedzhi Partners Group) acted (enters an ecosystem of Sberbank).

A set of the principles of competitiveness of the states is updated annually. It fixes the most topical issues which have direct influence on national competitiveness. It is possible to determine by them how this or that country develops, its development and as her citizens feel is how steady.

This year experts defined 10 competitiveness indicators most significant at the moment. Among them – the level of cooperation of the state and private sectors of economies. Than it is more at them a common ground, mutual understanding is deeper and what better works out a regulatory framework on which this cooperation is based, national economy is considered that steadier.

One more important factor – development in the country of innovations, new business models, non-standard organizational solutions and technologies. The indicator of competitiveness is also support of talents, development of personnel potential for the future, creation of opportunities for manifestation of the capabilities and competences of all demographic and social groups.

Significant indicator of level of competitiveness – use of unique resources and the implemented projects of the cities and regions, projection of the most successful initiatives all over the country.

Important indicators experts called also participation of the country in international traffic of goods, the capitals, information, talents and the ideas, care of ecology, reproduction of resources, development of technologies which will allow to increase efficiency of use of energy, the earth, water, minerals, creation of the industries of the future, use of the best world practices in the development area of strategy, internal regulation, policy and business.

1. Creation of the coalitions and state-private platforms for transformation of an economic landscape.

The state and private sectors should cooperate and integrate resources for carrying out economic conversions. Cooperation, information exchange, the joint investments and other forms of partnership between the state and private sectors are important for the cities, regions and the countries aiming at conversion and improving competitiveness. The mechanisms allowing to exchange the ideas and to develop common goals and values between participants of the state and private sectors should be implemented and strengthened. The regulatory framework should promote interaction of the state and private sectors, the joint investments and free circulation of resources and talents between sectors and the organizations.

2. Make innovations the center of transformational strategy and initiatives

Transformation depends on creation of the new markets, technologies, products, skills, opportunities, the industries and institutes and is possible only thanks to innovations. Decision-making bodies should create and develop institutes for adaptation of new developments, to stimulate and encourage the new ideas, business models, organizational solutions and technologies.

3. A transformation basis in development of world-class personnel potential, including use of potential of nedopredstavlenny groups.

The talent is the important engine of growth and transformation. The future of the cities, regions, the nations and the organization depends on consolidation of scientific, technical, educational, business, political, public qualities and skills of leadership for problems of conversion of different spheres of life. The interested representatives of private and state sectors should work together to cultivate need of conversions and also to prepare the personnel necessary for creation of the structures capable to reveal at citizens and to develop the skills necessary in the future. It is necessary to pay attention to different layers and groups of the population and to make efforts for involvement of all demographic and social groups in business, development of technologies and innovations.

4. Use successful local and regional initiatives as pilot and demonstration examples for distribution through the whole country.

City and regional innovation ecosystems concentrate talents and provide to the innovation enterprises necessary skills, infrastructure, communications and knowledge. The cities and regions should use the different unique resources and institutes for conversion of the economy, creating opportunities for stimulation of national initiatives. At the same time they should accelerate growth at the expense of global resources and opportunities.

5. Implementation and assistance to global distribution of the functional, focused on the future and based on IP technologies modes and organizations capable to support technology acceleration and high-growth innovations.

The innovators and producers of changes rewarded for their efforts, investments and risk will provide prosperity of innovations and, thereby, will lead to necessary IP to economic conversions. The functional and effective modes are necessary for this process of providing incentives, stimulation and involvement of the innovation enterprises and investments into high-growth global economy. Politicians should create the IP modes which quickly adapt during an era of destructive and exponential growth of technologies.

6. Use infrastructure projects to transform the physical world and to accelerate transformation of the industry, creating demand for the innovative and steady technologies and business.

The world does not lack the infrastructure needs for such areas as water supply, power, transport, housing, communication, etc. Orientation to these infrastructure projects can transform the world around and give an impulse to development of new opportunities, technologies, business models and industries, accelerating economic conversions. For this purpose perspective infrastructure projects should provide stability of reproduction by development and deployment of the innovative technologies, business, finance, regulation, trade and public-private partnership.

7. Accelerate transformation and economic growth thanks to global partnership in the field of business, technologies and the state innovations, accelerating exchange of product flows, people, the capital between the different countries.

The international product flows, the capitals, talents and the ideas are the important factors promoting transformation of the cities, economies and the countries: world communications expand a circle of the ideas available to any project or an initiative promote creativity, introduce various and complementary skills, promote rapprochement of the purposes, make new technologies available, create possibilities for investments and expansion of business, stimulate development of business opportunities and create policy and strategy. Concerned parties in the field of policy and business should support the public and transparent markets and implement the innovation platforms for global cooperation, trade and investments.

8. Study the potential of the innovative technologies and steady business models for increase in productivity of natural resources to separate growth from impact on the environment and to transform an industrial trace.

Achievements in such technologies as Internet of Things, artificial intelligence, high-performance computing, robotics and modern materials, can significantly increase efficiency and productivity of energy, the earth, water, minerals, etc. The companies can use such technologies for sustainable development and build the new enterprises. The cities and the countries should create structures for support of emergence and expansion of scales of technological, innovative and sustainable solutions and the enterprises. Income gained from the existing assets should be used for creation of the industries of the future, stimulation of economic conversions and support of efforts on approval of growth of preserving

9. Provide transformation using the focused on the future, seamless and effective rules which allow to experiment and study the innovative technologies, business installations.

For acceleration of implementation of new technologies, creations and development of the innovation business and acceleration of economic conversions are necessary perspective structures which allow to experiment and to carry out quickly institutional and business training. The regulatory framework sets conditions under which business and public sector work and cooperate and also sets restrictions and incentives for investors, entrepreneurs and innovators in all sectors. It should be designed so that to reduce friction in the business environment and to promote innovations, but not to interfere of the City, regions and the cities which succeed in innovations of these structures can get competitive advantage.

10. Develop initiatives of transformation systematically, taking into account the best world practices in the field of strategy, regulation, policy and business. Knowledge is a fundamental factor of business development, the city and country. To achieve success in today's quickly changing hi-tech global landscape, subjects of transformation should be guided well in the modern concepts checked by world advanced practice. Concerned parties in business, science and public sector should participate in development of strategy, regulations and contrastive analysis of policy systematically.

You See Also

• Eurozone economy
• Economy of Russia
• Economy of the USA

Notes