MALAYSIA has ranked second in Southeast Asia and managed to beat out China’s behemoth economy when it comes to competitiveness, according to a new report from the World Economic Forum (WEF).
The Southeast Asian country, ranked 25th in the world, is one of only three non-high-income economies to feature in the top 40.
Neighbour Singapore retains its high-ranking spot in number two, just behind the United States.
Others in Asia Pacific to make the top 20 include Japan (5th), Hong Kong (7th), Taiwan (13th), Australia (14th), South Korea (15th), and New Zealand (18th).
The report scored countries on 12 pillars of competitiveness. These include institutions, infrastructure, information and communication technology adoption, macroeconomic stability, health, education and skills, product market, labour market, financial system, market size, business dynamism, and innovation capability.
Those countries that score high across all 12 pillars of competitiveness are closest to what the WEF terms the “frontier” – the future of prosperity.
The world has changed in recent years, the WEF said in its report. The Fourth Industrial Revolution – characterised by a fusion of technologies that is blurring the lines between the physical, digital, and biological spheres – has become a lived reality for millions of people around the world. It is changing how we operate and generating new opportunities for business, government and individuals.
At the same time, the world is still in its recovery phase following the global financial crisis, which marked its ten-year anniversary this year.
Both of these paradigm-shifting occurrences are “redefining the pathways to prosperity and, indeed, the very notion of prosperity, with profound implications for policy-making,” the report said.
To reflect this, the WEF has updated their methodology to incorporate the notion of the fourth industrial revolution into the definition of competitiveness. It hopes the index can act as “a much-needed economic compass” for concerned leaders “grappling for answers and solutions, aiming to go beyond short-term, reactionary measures.”
The index emphasises the role of human capital, innovation, resilience and agility, as not only drivers but also defining features of economic success in the fourth industrial revolution. It calls for better use of technology for economic leapfrogging – but also cautions that this is only possible as part of a holistic approach with other factors of competitiveness.
The report also highlighted inequalities across the region.
In Southeast Asia, Singapore (2nd) is 34 points closer to the frontier than Laos (112th) with 49.3 points. There is also almost 20 points difference between neighbours Thailand (38th, 67.5) and Cambodia (110th, 50.2).
The rest of Southeast Asia was scattered across the rankings, with Indonesia in 45th, Philippines (56th), Brunei (62nd), and Vietnam (77th).