Image: REUTERS/Fabrizio Bensch
Klaus Schwab Founder and Executive Chairman, World Economic Forum
Saadia Zahidi Managing Director, Head of Social and Economic Agendas, World Economic Forum
Even as globalization has led to unprecedented gains for many from the movement of goods, services, people and ideas, there are those who have lost out – economically, politically or culturally. This has in part contributed to the rise of polarized political debate and populist, nationalist and, at times, extremist agendas, both in the West and in emerging markets. Against this context of citizens’ concerns about jobs, inequality and globalization, policymakers are looking for new pathways to prosperity.
We now know more about those pathways -and their nuances. Exactly ten years ago, global headlines were dominated by the financial crisis. What followed was an erosion of trust in elites and institutions, but also new lessons about which economies bounced back, which ones struggled and why. More recently, as the Fourth Industrial Revolution has unfolded, it has brought fresh opportunities but also new questions about how economies can best integrate technologies for a faster path to broad-based prosperity. Additionally, growing job polarization across advanced economies as well as a decline in labour’s share of income in industrialized economies over the last decades has led to a call for more dynamic education systems and labour market policies. It has also become clear that the manufacturing-led development model that lifted millions out of poverty, most recently in Asia, is unlikely to be viable – or possibly even desirable – in the future. A wide range of new technology-intensive, high-skilled occupations are expected to be in demand in the future, along with new growth broadly across sectors such as education, health, care, green energy and more, calling for a new approach to “industrial policy” in the digital age.
The World Economic Forum is introducing the new Global Competitiveness Index 4.0 as a much-needed economic compass, building on forty years of experience of benchmarking the drivers of long-term competitiveness and integrating the latest learnings about the factors of future productivity. The GCI 4.0 is organized into 12 pillars: institutions; infrastructure; ICT adoption; macroeconomic stability; health; skills; product market; labour market; financial system; market size; business dynamism; and innovation capability. The Index also introduces a new progress score ranging from 0 to 100, with the frontier (100) corresponding to the goal post for each indicator and typically representing a policy target. This approach emphasizes that competitiveness is not a not a zero-sum game between countries-it is achievable for all countries.
As countries reset their path to competitiveness, there are ten key takeaways for all economies:
2. Investing in people is good for social and economic outcomes. There is no trade-off between social inclusion and a country’s level of competitiveness. In fact, the health, education and skills of a population are among the key drivers of productivity, particularly in the context of economic and technological transformations. With the right skills, workers can become the agents driving and managing such changes, rather than being displaced by them. Investing in people can no longer be an afterthought – it is a fundamental building block of growth and resilience in the Fourth Industrial Revolution.
The views expressed in this article are those of the author alone and not the World Economic Forum.
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