Singapore and the Asian region have soared to the top spot of the world’s most competitive economies, according to a new report released by the World Economic Forum (WEF) on Tuesday.
Singapore’s economy rose past the US this year, taking the top spot for the world’s most competitive economy. The Asian region has developed into the most competitive economic region in the world, according to the report.
“Led by Singapore, the East Asia and the Pacific region is the most competitive in the world, followed by Europe and North America,” stated the report.
The competitive index was formulated to take into account the drivers of economic growth and how efficiently labor and investment capital “combined for generating output.”
In the case for Singapore, the report listed several factors in the nation that have created a fertile environment for firms.
“The country ranks first in terms of infrastructure, health, labor market functioning and financial system development,” concluded the report.
The US, Hong Kong, The Netherlands, and Switzerland rounded out the top five list of most competitive economies.
The report also criticized governments and central banks around the world for massive capital injections into the economy after the Great Recession to prompt continual GDP growth targets that has subsequently reduced productivity growth.
“Although loose monetary policy mitigated the negative effect of the global financial crisis, it may have also contributed to reducing productivity growth by encouraging capital misallocation,” read the report.
The report advocated governments to stimulate economies through investment rather than monetary policy.
“More specifically, fiscal policy that prioritizes stimulating productivity enhancing investments in infrastructure, human capital and R&D can indeed help
the economy to return to a higher growth trajectory, complemented by structural reforms that make it easier to innovate and enable responsible and inclusive businesses to thrive,” stated the report.