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Few economies ready for long-term prosperity through improved public services: WEF study

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New Delhi | Geneva: Few economies in the world are ready for long-term prosperity through improved public services, green investments and digitization, a study by the World Economic Forum showed on Wednesday.

The special edition of the WEF‘s Global Competitiveness Report, which examined how the recovery from the COVID-19 crisis can build productive, sustainable and inclusive economic systems, found that the countries with advanced digital economies, strong social safety nets and robust healthcare systems have managed the impact of the pandemic more effectively.

While the report measured which countries are best prepared for recovery and future economic transformation, it has suspended the overall country rankings for this year due to the extraordinary COVID-19 response measures by governments.

“Almost one year after the onset of the COVID-19 crisis, the deep economic recession it has triggered continues to have profound economic and social consequences,” the WEF said while noting that no nation has emerged unscathed.

As the global economy recovers, the opportunity exists for countries to expand their focus beyond a narrow return to growth, it added.

“The WEF has long encouraged policymakers to broaden their focus beyond short-term growth to long-term prosperity. This report makes clear the priorities for making economies more productive, sustainable and inclusive as we emerge from the crisis. The stakes for transforming our economic systems simply could not be higher,” said Klaus Schwab, Founder and Executive Chairman of the Forum.

According to the report, countries with advanced digital economies and digital skills have been more successful at keeping their economies running while their citizens worked from home. The Netherlands, New Zealand, Switzerland, Estonia, and the US have performed well on this measure.

Countries with robust economic safety nets, such as Denmark, Finland, Norway, Austria, Luxembourg and Switzerland, were well placed to support those who could not work.

Similarly, countries with strong financial systems such as Finland, the US, the UAE and Singapore, could more easily provide credit to SMEs to prevent insolvency.

Countries that could successfully plan and integrate health, fiscal and social policies have been relatively more successful in mitigating the effects of the crisis, including Singapore, Switzerland, Luxembourg, Austria and the UAE.

Anecdotal evidence suggests that countries with previous experience of coronavirus epidemics (such as SARS) had better protocols and technological systems in place (Republic of Korea, Singapore) and could contain the epidemic relatively better than others.

In emerging markets and developing economies, business leaders noted an increase in business costs related to crime and violence, a reduction in judicial independence, a further reduction in competition and growing market dominance, and stagnating trust in politicians.

They, too, expressed positive views on government response to change, collaboration within companies, and venture capital availability. They also noted an increase in the capacity to attract talent, potentially facilitated by the more digital labour market.

The report further said future-ready education, labour laws and income support should be better integrated to expand the social protection floor.

“Germany, Denmark, Switzerland and the UK are relatively better prepared than others to combine adequate labour protection with new safety net models. South Africa, India, Greece and Turkey are less prepared,” it added.

It also said Germany and France are among the countries that appear to have achieved some success over the past 3-5 years — in parallel with the emergence of Berlin and Paris as hotspots for start-ups and the establishment of a few unicorns in both countries.

Among emerging economies, India shows a similar success path, fuelled by the visibility of some of its tech hubs, particularly Mumbai and Bangalore, it added.

A number of large economies have seen downward trends in adequacy of skill sets of all graduates in recent years (among them, India, South Africa, US and Germany) while others such as Korea, Rep, Saudi Arabia, Turkey and China have improved their scoring.

The tertiary education systems that are rated as best placed to deliver to the needs of employers are those of Switzerland, Singapore, Finland and Chile. The countries that trail behind are Ethiopia, India, Brazil, Japan, Italy and UK.

“Tanzania and China are among the best improved, while India, Ethiopia and the US have seen the largest decline,” the WEF report said.

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