Perhaps the most basic measure of a country’s wealth is its Gross Domestic Product, or GDP. In a nutshell, this refers to the all-around value of goods and services made in a country within a given time period. Afterdowningstreet.net lists China as the world’s richest country in 2017, based on its GDP, with the United States and India in second and third place, respectively.
The World Economic Forum (WEF) on the other hand, goes beyond the GDP in its countdown of the 10 best economies in the world, and takes into consideration the “set of institutions, policies and factors that determine the level of productivity of a country.” In their Global Competitiveness Report, the WEF put more weight on a country’s long-term sustainable economic growth, and the high standard of living for its residents. In 2014, they released this list of the 10 most competitive economies in the world:
10 – United Kingdom (Prime Minister: 2016 to present – Theresa May)
9 – Sweden (Prime Minister: October 2014 to present – Stefan Löfven)
8 – Finland (Prime Minister: 2015 to present – Juha Sipilä)
7 – Hong Kong (Chief Executive: 2012 to 2017 – Leung Chun-Ying, July 2017 to present – Carrie Lam)
6 – Japan (Prime Minister: 2012 to present – Shinzō Abe)
5 – Netherlands (Minister-President: 2010 to present – Mark Rutte)
4 – Germany (Chancellor: 2005 to present – Angela Merkel)
3 – United States (President: 2009 to 2017 – Barrack Obama, 2017 to present – Donald Trump)
2 – Singapore (President: 2011 to August 2017 – Tony Tan, September to present – Halimah Yacob)
1 – Switzerland (Federal Council)
Based on the WEF’s analysis, the developing economies are factor-driven, depending heavily on natural resources and unskilled labor. As productivity and wages increase, the economy begins to shift to being efficiency-driven, where the emphasis is more on higher education and product quality. The world’s most advanced economies, under which the countries listed above are classified, are known as innovation-driven. Their focus is technology and sophisticated production techniques that are necessary to maintain competitiveness.
Factors such as life expectancy, percentage of government debt when compared to the GDP, and the number of patents per 1 million people, are important when looking at these advanced economies. Life expectancy is one of the measures of the quality of life in a particular country. It tends to be higher for these countries, because of the advanced healthcare and welfare systems. Hong Kong, Japan, Singapore, and Sweden have the longest life expectancy among the 10 countries listed.
In 2014, Japan and the United States had higher government debts than their respective GDPs for that year. In Japan’s case, the WEF attributes this to increased government spending to stimulate the economy and quantitative easing to spur inflation. This contradicts the belief that only developing economies are prone to huge debts. Government debts incurred by economic powerhouses are being used for maintaining strong institutions and quality infrastructure. This in turn bolsters high efficiency and productivity among the workforce.
The number of patents per 1 million people is an important factor in innovation-driven economies. This is a measure of the advancement of technology that can make production more efficient, effective, and cost-friendly. Switzerland, the United Kingdom, and the United States rank high on this list. Note that these countries are also home to some of the best research universities in the world.
With heavy emphasis on long-term sustainable growth and high quality of life, these countries are all set to continue dominating the global economy in the coming years. Countries with high GDPs like China and India are starting to catch up though. Once they’ve completely shifted to being innovation-driven economies, don’t be surprised to see them give those listed here a run for their money.