20140521 Global Competitiveness Brazil China Korea Mexico Global...May 21, 2014 · Brazil) has shown that innovations can accrue from a close collaboration between the scientific

Global Competitiveness: A comparison case on Brazil, China, Mexico, and South Korea

Rio de Janeiro, 27.05.2014

Alex Wong, Senior Director, Head of Center for Global Industries (Geneva)Silvio Dulinsky, Director, Head of Latin America Membership

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Source: IMF, World Economic Outlook database, April 2013 edition

What lies behind different growth paths?

Korea

China

Kenya

Brazil

The Global Competitiveness Index

The set of institutions, policies, and factors that determine the level of productivity of a country”. The level of productivity, in turn, sets the level of prosperity that can be earned by an economy.

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Launched in 1979 covering 16 countries

GCR 2013-2014: 148 economies

Flagship product: The Global CompetitivenessReport Series

Other special topic and regional reports: The Global Information Technology Report

The Global Enabling Trade Report

The Travel & Tourism Competitiveness Report

The Africa Competitiveness Report

The Europe 2020 Competitiveness Report

The Arab World Competitiveness Report

The Global Competitiveness & Benchmarking Network

Qualitative data sourced from the annual Executive Opinion Survey carried out by the network of the World Economic Forum’s Partner Institutes.

Quantitative data sourced from international organizations.

The Global Competitiveness Report 2013-2014: Data

Basic requirements

1.Institutions

2.Infrastructure

3.Macroeconomic environment

4.Health and primary education

Efficiency enhancers

5.Higher education and training

6. Goods market efficiency

7. Labor market efficiency

8. Financial market development

9. Technological readiness

10. Market size

Innovation and sophistication factors

11. Business sophistication

12. Innovation



Countries at each stage of development

Global Competitiveness Ranking 2013-2014Rank Economy Score Rank Economy Score1 Switzerland 5.7

2 Singapore 5.6

3 Finland 5.5

4 Germany 5.5

5 United States 5.5

6 Sweden 5.57 Hong Kong SAR 5.58 Netherlands 5.49 Japan 5.410 United Kingdom 5.4

11 Norway 5.312 Taiwan, China 5.313 Qatar 5.214 Canada 5.215 Denmark 5.216 Austria 5.217 Belgium 5.118 New Zealand 5.119 UAE 5.120 Saudi Arabia 5.1

21 Australia 5.125 Korea, Rep. 5.029 China 4.834 Chile 4.635 Spain 4.638 Indonesia 4.545 Mauritius 4.453 South Africa 4.455 Mexico 4.356 Brazil 4.360 India 4.3

64 Russian Federation 4.269 Colombia 4.291 Greece 3.996 Kenya 3.8120 Nigeria 3.6133 Pakistan 3.4137 Mozambique 3.3143 Haiti 3.1148 Chad 2.9

The Global Competiveness Landscape

100-14876-10050-7526-5010-25Top 10

Global Competitiveness Index 2013-2014 rank

Source: World Economic Forum, 2014

Brazil’s competitiveness performance has improved since 2006, but trend was interrupted in 2013

Mexico and Brazil face similar challenges in their path towards an innovation-driven economy.

Brazil recognizes the need to improve its competitiveness, especially in regards to innovation and infrastructure, yet remains to embark in a more ambitious process of structural reforms to allow sustained progress.

In comparative terms, Brazil depicts a similar competitiveness profile to Mexico…

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6.00 Institutions

Infrastructure

Macroeconomicenvironment

Health and primaryeducation

Higher education andtraining

Goods market efficiency

Labor market efficiency

Financial marketdevelopment

Technological readiness

Market size

Business sophistication

Innovation

GCI by pillar, 2013-2014

Brazil Mexico

In particular, China has been driving itscompetitivenessthanks to an ambitious plan of investments in infrastructure and modernisation of productive sites coupled with marketreforms.

More recently it isalso investing in intangible assets and R&D.

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Infrastructure








Market size


Innovation

GCI in Brazil and selected emerging economies, 2013

Brazil Indonesia China India

…and a similar competitiveness profile to other emerging economies…

The profile of more developed economiescan offer a comprehensiveagenda of what isneeded to increaseBrazil’s productivity.

Equally important isthe sequencing of the policies and investments over time.

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7Institutions

Infrastructure








Market size


Innovation

GCI by pillar, 2013

Brazil US EU Australia

… but when compared to advanced economies, has gaps related to institutions, infrastructure, goods market efficiency (competition), skills and innovation…

South Korea providesan example of how to overcome the middle-income trap by investments in physical capital and intangible assets.

Korea’s focus on technology, high-quality education and innovation, coupledwith market reforms, is paying off.

… areas where South Korea, with a similar level of development in the 1980s, focused on to develop its productivity …

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Infrastructure








Market size


Innovation

Global Competitiveness Index by Pillar, 2013-2014

Brazil South Korea

Main conclusions - Challenges…

… and continues to face significant challenges in terms of lagging infrastructures, inefficient allocation of production factors and capacity to innovate…

… that will require the adoption of reforms and smart investments to support productivity growth and sustained economic growth.

Insufficient investment in skills, innovation and infrastrcuturedevelopment, despite recent efforts, and a lack of reforms in the goods and labour markets are dragging Brazil’s productivity.

Addressing these weaknesses will require reforms in the functioning of markets and more efficient investments in infrastructures, education and innovation.

Brazil has benefited from strong external demand for commoditiesand an increase of capital inflows. These conditions are nowchanging, while productivity remains stagnant.

Despite rapid growth in the recent past, Brazil’s competitiveness has not improved much in past years…

... and opportunities

… coupled with a rather sophisticated business community and the rise of a more demanding middle class…

… do open important opportunities to build from and transform its economy if the right measures are adopted.

Several businesses in Brazil have developed innovative business practices, which in past years has been reinforced by a risingmiddle class that demands more sophisticated products and services.

Brazil counts on a large and diversified internal market that has the potential to offer important economies of scale and scope. In pastyears it has built on its comparative advantages to further developspecific world-class industries such as agro-business and mining.

Brazil’s large and fairly diversified economy and strong performance in some key sectors…

Appendices

Fostering competitiveness through multistakeholder dialogues (1/2)

The Latin American CompetitivenessLab is a high-levelmultistakeholderinitiative convening a community of experts to addressthe skills and innovation gaps in Latin America

• The Latin American Competitiveness Lab is an ongoing initiative that started in February 2014, afterendorsement of the project at AM14

• The project focuses on analysing the skills and innovation gap in Latin America and identifyingactions to bridge it by forging public-privatecollaborations and strengthening regionalcooperation

Competitiveness agenda needs to be articulated at local level, where multistakeholdercoordination can be stronger.

However, experience shows that regional action principles can be drawn and local stakeholders can learn from each other.

Demand (PULL) Factors:• Foreign Direct Investment: introduce new skills and

knowledge that can be transferred to local companies • Start-ups: New companies can help developing and

demanding new knowledge and skills to embark in higher productivity activities.

• Clusters: The development of clusters (e.g. aerospace in Brazil) has shown that innovations can accrue from a close collaboration between the scientific and production systems

Supply (PUSH) Factors:• Closer involvement of the business sector to incorporate the

development of needed skills in the educational system. Eg. Costa Rica (electronics), Mexico (automotive), Peru (mining), Brazil (aeronautics)

• Involvement of companies in developing and upgrading skills through apprenticeship programmes

• Development of entrepreneurship programmes at universities and other education institutions

Fostering competitiveness through multistakeholder dialogues (2/2)

Documents

20140521 Global Competitiveness Brazil China Korea Mexico Global...May 21, 2014 · Brazil) has shown that innovations can accrue from a close collaboration between the scientific