In 2017, the international scene will continue to be affected by a number of geopolitical changes, with new leaders in the US, in several European countries, and the continued emergence of new economic contenders from other regions.
The important benefits generated over the last 30 years by the continuous reduction of tariff barriers, and the globalisation of trade and investment flows may be significantly reduced if local and national interests continue to prevail over longer term objectives for a more dynamic, equitable, sustainable and innovative global economy. As many parts of the world continue to be faced with acute challenges, including mass unemployment, the race for competitiveness will become much more fierce — and critical — than in the past.
How can countries enhance competitiveness? Basically — although starting conditions, including demography, geography, natural endowments and socioeconomic conditions and infrastructure clearly need to be taken into account — it boils down to producing the right products (what global markets will want) under the right conditions (at the right price and quality levels).
In other words, competitiveness requires diversification and productivity. Since we live in a world of rapid technological change, innovation is a critical factor to achieve both: new products and services emerge from technological advances (think of blockchains or 3D printing), as well as new ways to produce and distribute them (think of Uber or telemedicine).
Since innovation can be represented as the result of combining three key ingredients, namely market access (reaching a critical mass of customers), financing (e.g. venture capital) and talent (i.e., the ideas and individuals who will generate and carry innovations), each of them becomes a critical to enhancing competitiveness.
It is on this last critical factor — talent — that INSEAD’s Global Talent Competitiveness Index has focused for the last four years. From this work, it has become clear that at least three specific avenues will be key to enhancing nations’ and corporations’ competitiveness on the global stage: soft skills, governance knowledge and the ability to articulate and pursue a global vision.
Launched in Davos on January 16, the fourth edition focused on “technology and talent”. It ranked 118 national economies, and showed that European economies (and especially Nordic economies) continue to occupy a majority of the top rankings (14 out of the top 20), while some new contenders start to emerge, including the UAE (19). As mentioned before, the near future will usher an era in which the race for competitiveness will become fiercer — and more critically important — than ever. What can nations and organisations do to improve their own? Policies and regulations (fiscal, commercial, migratory, labour-related) will naturally remain key: as GTCI amply demonstrated since 2013, open economies remain the most likely winners in the medium and long term, and education will remain a linchpin for success.
Yet, rapid technological progress, combined with a fast moving geopolitical environment suggest that immediate attention be devoted to the three elements mentioned earlier, namely:
• Soft skills: Robots and artificial intelligence are already displacing significant numbers of jobs, not just in manufacturing (tedious, repetitive and dangerous tasks being first candidates) but in white-collar activities including legal, banking, accounting, press and media to name a few. The winners of the competitiveness race will hence be those who develop and equip themselves with the skills that are least easily replicable by machines.
Those include in particular the ’4 Cs’: creativity, communication, cooperation and the ability to handle complex situations. Such skills need to be constantly updated, and hence can only be taught through lifelong learning.
• Knowledge and governance experience: Competitiveness on the global scene will also require that countries and companies be equipped with the right kind of leadership and decision making mechanisms. Technology-savvy leaders and boards will be critically precious in this regard.
• Finally, the ability to formulate, communicate and implement a strategic vision will be the third pillar for success in enhancing competitiveness. Short-term and knee-jerk decisions will remain obstacles on the road towards sustainable, inclusive and competitive societies. On the contrary, coherent and steady visions of how the next generations will be able to live rewarding and meaningful lives will lead to longer-term success.
The writer is Executive Director for Global Indices at INSEAD.