Singapore reclaims top spot in world competitiveness ranking after three years

SINGAPORE – After being adrift for the past three years, Singapore climbed three rungs and regained the top spot in the IMD World Competitiveness Ranking in 2024 against a field of 67.

“Singapore’s performance marks a return to form; last occupying first place in 2020, it then fell to fifth, third, and finally fourth in the following years, while Denmark and Switzerland performed a tussle for power over the top spot,” said the Switzerland-based International Institute for Management Development (IMD), which produces the benchmark based on 333 competitiveness criteria.

Coming in ahead of Switzerland and Denmark, the Republic posted robust performances across all four categories that comprise economic performance, government efficiency, business efficiency and infrastructure.

Among these, Singapore stood out for business efficiency by clinching the top spot among its peers on the index for the underlying factors of labour market – up three spots – and attitudes and values with a 12-position climb. It also shot up 21 rungs to the No. 2 spot in terms of management practices.

The Republic also took pole position in technological infrastructure, boosting its standing to No. 4 in the overall infrastructure category, from No. 9 previously.

It ranked No. 2 in terms of government efficiency after climbing five spots from seventh place, boosted by societal framework (up nine spots to No. 11) and public finance (up five to No. 4).

On the flip side, the Republic’s economic performance stagnated at No. 3, dragged down by an 11-rung decline by prices to 62, and a three-spot fall in employment to No. 5.

Associate Professor Jamus Lim from Essec Business School noted that Singapore’s traditional strengths lie in “an efficient government, ease of doing business, and world-class infrastructure also continued to propel its overall performance”.

However, he said the high costs of living here is specifically an area of concern, “where Singapore placed 62nd out of the 67”.

“Many other areas where Singapore exhibits weaknesses – such as rental prices, cost of transport, compensation of management and employees, and health expenditures – are directly or indirectly linked to it,” Prof Lim said.

This becomes the primary challenge for policymakers, not only because high prices and costs weigh on Singapore’s competitiveness, but also because of its implications on people’s confidence in the economy.”

On Singapore’s high prices, NUS Business School professor in strategy and policy Lawrence Loh said: “This is expected of a land-scarce country.”

With price levels just one of the inevitable constraints on the economy and with regional economies relentlessly continuing to advance and narrow the Republic’s lead, “Singapore cannot rest on its laurels”, he added.

IMD’s ranking analysed survey responses from more than 6,600 C-suite executives and mid-level managers from the 67 economies polled between March and May 2024, and 164 pieces of statistical data.

A key finding was that size did not matter in economic competitiveness, with the top 10 spots dominated by smaller economies.

Notably, second-placed Switzerland rose one rank from its third placing in 2023 amid better economic performance and business efficiency as well as its continued lead in government efficiency and infrastructure.

It was followed by Denmark, which slipped to third in 2024, down from first following a decline in economic performance, but researchers said the shift was “insignificant” as the country remained a poster child of competitive economies.

Ireland was No. 2 in 2023, but fell to fourth spot in 2024.

NUS’ Prof Loh noted that Singapore stood out on sub-factors “related to policy and cultural aspects”. For example, Singapore’s labour market shines in aspects such as remuneration management, worker participation and foreign talent attraction, he said.

“The country also does extremely well in terms of attitudes and values, which include accommodating views on globalisation, flexibility and adaptability, along with a value system that supports competitiveness.”

Prof Lim noted: “Wage growth has barely kept pace with overall inflation, and if anything, I would like to see real wages continue to rise this year and next, to offset the loss in purchasing power of the population.

“But productivity needs to pick up the slack, hopefully from gains that emerge from a wider roll-out of artificial intelligence into the economy.”

He cautioned that the takeaway from this report should not be to conclude that the solution to keeping costs down is by suppressing wages.

Colin Tan
Senior Business Correspondent
18 June 2024