Global Economic Futures Competitiveness in 2030 2025

Competitiveness and prosperity FIGURE 1 30 40 50 60 70 80 Global Competitiveness Index 4.0 2019 score (0-100 scale)GDP per capita, constant $ (2017 purchasing power parity, log scale)100,000 10,000 1,000 Central Asia Eastern Asia Europe Latin America and the Caribbean Middle East and Northern Africa Northern America Oceania South-eastern Asia Sub-Saharan Africa Southern Asia100 Source: World Economic Forum. (2019). Global Competitiveness Report 2019; International Monetary Fund. (2024). World Economic Outlook. Global patterns of competitiveness While there is no single pathway to competitiveness, the evidence points to the importance of strong macroeconomic fundamentals, long-term policy vision, investments in people and thriving business ecosystems.8 While there are undeniable engines of innovation and growth – such as technology – competitiveness is ultimately about the diffusion of innovation and opportunities throughout the economy. When a broad base of businesses has access to capital, skills and markets, the whole economy benefits from spillovers in the form of job creation, innovation, trade, higher quality of goods and services and investments in people. Global patterns of competitiveness are evolving rapidly. While high-income and digitally mature economies – like the US and South Korea – have long benefited from sophisticated innovation and financial/institutional ecosystems, their competitive edge is no longer unchallenged. Many developing economies, particularly in Asia, have moved rapidly up the global value chain by investing in diversification, talent, infrastructure and technology diffusion.9 Since 2010, productivity growth in these Asian economies has been more than twice as fast than in the rest of the world.10 Business dynamism is one of the key differentiators for these competitiveness patterns. Whether in advanced technology clusters, emerging manufacturing hubs or service-driven markets, economies that support experimentation, risk taking and firm-level turnover tend to outperform those characterized by rigidity and concentration.11 According to the World Economic Forum’s latest survey of global executives, many lower- income economies exhibit a strong culture of entrepreneurial risk taking (see Figure 2). Yet, these economies frequently face structural constraints that restrict the ability of firms to compete and grow. A divide is evident among high-income and upper-middle-income economies – while some countries sustain vibrant innovation ecosystems and entrepreneurial risk taking, many suffer from weaker dynamism. Firm-level indicators underscore the unevenness of business dynamism globally. Despite a post- COVID-19 pandemic surge in new business applications – including a record 5.5 million in the US12 – the average share of newly created companies in high-income economies has remained flat at around 9% since the 2008 global financial crisis. By contrast, the share in low-income economies rose sharply in 2022, reaching nearly 25%, a jump of 10 percentage points from 2010.13 Economies that support experimentation, risk taking and firm-level turnover tend to outperform those characterized by rigidity and concentration. Global Economic Futures: Competitiveness in 2030 7