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1、IMD World Competitiveness Booklet2025World CompetitivenessCenterJune 2025IMD WORLD COMPETITIVENESS BOOKLET 2025ISBN-13 978-2-940485-65-9ISSN 1026-2628Copyright 2025IMD International Institute for Management Development 23,Ch.de BelleriveP.O.Box 915CH-1001 LausanneSwitzerlande-mail:wccinfoimd.orgInte

2、rnet:www.imd.org/wccDatabase:https:/worldcompetitiveness.imd.org/IMD,IMD REAL LEARNING.REAL IMPACT,and IMD WORLD COMPETITIVENESS YEARBOOK are trademarks of IMD International Institute for Management DevelopmentChoose the product that meets your needsVisit our eShop:www.wcceshop.org3Preface4The IMD W

3、orld Competitiveness Center5Partner Institutes6Analysis13The macroview:2025 14Understanding the drivers of global fragmentation through executives perceptions24Key trends and regional shifts in the 2025 WCR36Rankings in a Nutshell53The 2025 IMD World Competitiveness Ranking54Methodology in a Nutshel

4、l56What is the IMD World Competitiveness Ranking?57Selected Breakdowns58Factor Rankings62Competitiveness Country Profjles71Statistical Tables143Factor I:Economic Performance144Factor II:Government Effjcpency145Factor III:Buspness Effjcpency148Factor IV:Infrastructure150Table of ContentsThis booklet

5、is just a summary.Tle complete Yearboo wptl full profjles and all tle statpstpcs is available digitally and in print.Visit our eShop:www.wcceshop.org4PrefaceIt can have escaped few peoples attention that the global economy in 2025 comes with a very Trump-like look and feel.Sometimes its just his rhe

6、toric;other times,his jack-in-the-box policies set and re-set the scene.But one constant since January 2025 is protectionism.For corporate leaders,now is not just a huge political moment in time but also a major business infmection point,and it calls for nothing less than a complete overhaul of corp

7、orate strategy including,but not limited to,sizeable investments in geopolitical scenario planning.And yet both public and private policymakers must remember that its not all about Trump.For some time now,leadership hasnt come from organizational charts but from infmuencers.Plus,we do work on a glob

8、al basis where location is less and less important,and the focus is increasingly on skills and tools.Then theres AI,which cannot be ignored and indeed should be embraced as a way to enhance everything from e-governance to education to workplace skills.What emerges clearly from the 2025 IMD World Com

9、petitiveness Ranking results is that traditional determinants of competitiveness macroeconomic stability,business-friendly environments,and quality infrastructure remain necessary but insuffjcient.Todays leaders are adding digital readiness,green transition management,and sophisticated approaches to

10、 resilience to the mix.We are at a point where competitiveness must be“re-earned”,with wise policy and strategic agility being good places to start.The 2025 IMD World Competitiveness Ranking results refmect how nations are responding to such pressures,but also the opportunities inherent in doing so.

11、The 2025 results also reveal interesting regional patterns.Several Asian economies continue their upward trajectory through strategic industrial policies and digital investments.The Gulf states are making remarkable progress in economic diversifjcation;building knowledge-strong economies while maint

12、aining their traditional strengths.Small,agile European economies including those outside of the EU are demonstrating that size is not the be-all and end-all of competitiveness if governance is effective and policy is coherent.In a world of fragments,those who can build bridges without sacrifjcing s

13、ecurity will ultimately prevail.The fragmented world economy is not a temporary detour but a new context for competition.Currency misalignments,trade fragmentation,infmationary cycles,and protectionist instincts are the contours of this evolving landscape.Within these challenges lie opportunities fo

14、r renewal.Countries and companies that recognize and adapt to the new normal will outperform by being more agile,strategic,and collaborative.Welcome to the 37th edition of the IMD World Competitiveness Yearbook.Professor Arturo BrisDirectorIMD World Competitiveness Center5William Milner Associate Di

15、rectorChinar Sharma Projects AnalystAlice Tozer Content ManagerThe IMD World Competitiveness CenterFor more than thirty-fjve years,the IMD World Competitiveness Center has pioneered research on how countries and companies compete to lay the foundations for sustainable value creation.The competitiven

16、ess of nations is probably one of the most signifjcant developments in modern management and IMD is committed to leading the fjeld.The World Competitiveness Center conducts its mission in cooperation with a network of 73 Partner Institutes in 60 countries to provide the government,business and acade

17、mic communities with the following services:Competitiveness Special Reports Competitiveness Prognostic Reports Workshops/Mega Dives on competitiveness IMD World Competitiveness Yearbook IMD World Digital Competitiveness Ranking IMD World Talent Ranking Hinrich-IMD Sustainable Trade Index Smart City

18、Index The IMD World Competitiveness Center TeamProfessor Arturo Bris DirectorChristos Cabolis Chief Economist&Head of OperationsJos Caballero Senior EconomistFabian Grimm Research SpecialistOdete Madureira WCC CoordinatorMadeleine Hediger Data Research and Online Services SpecialistContactWe also ha

19、ve the privilege of collaborating with a unique network of Partner Institutes,and other organizations,which guarantees the relevance of the data gathered.e-mail:wccinfoimd.orgInternet:www.imd.org/wccDatabase:https:/worldcompetitiveness.imd.orgJean-Franois Kaeser IT Consultant(KAESCO Consulting)6Arge

20、ntinaInstituto Shaw de Estudios Empresariales,Universidad Catlica Argentinahttp:/www.uca.edu.arDr.Marcelo Resico,Director,Shaw Institute for Business Studies(ISEE)Pilar Agostina Ferreyra,Research AssistantAustraliaCEDA Committee for Economic Development of Australiahttp:/.au Cassandra Winzar,Chief E

21、conomistJustine Parker,Media ManagerAustriaFederation of Austrian Industries,ViennaAustrian Institute of Economic Research,Viennawww.iv.at Dr.Christian Helmenstein,Chief EconomistMag.Michael Oliver,EconomistBahrainMinistry of Finance and National Economyhttp:/www.mofne.gov.bhDr.Faisal Hammad,Assista

22、nt Undersecretary for Competitiveness&Economic IndicatorsBelgiumFederation of Enterprises in Belgiumhttp:/www.feb.beDries Vantomme,Attach Economics&Business CycleBotswanaBotswana National Productivity Centre(BNPC),Botswana http:/www.bnpc.bwBabuya S.Siku,General Manager(Acting)Letsogile Batsetswe,Exp

23、erienced Research Consultant BrazilFundao Dom Cabral Innovation,AI and Digital Technologies Centerhttp:/www.fdc.org.brHugo Tadeu,Director and Professor Jersone Tasso Moreira Silva,Associate ProfessorBruna Diniz,Researcher Kaua Kenner,ResearcherBulgaria Bulgarian Chamber of Commerce and Industryhttp:

24、/www.bcci.bgBoryana Abadzhieva,Head of Economic Analysis and Policy DepartmentMagdalena Koshulyanova,Junior expert,Economic Analysis and Policy DepartmentApplied Research and Communications Fund,Sofja,Center for the Study of Democracyhttp:/www.csd.bgRuslan G.Stefanov,Program Director and Chief Econo

25、mist,Center for the Study of Democracy Atanas Nedyalkov,Senior Analyst,Innovation and Finance,Applied Research and Communications Fund Daniela Mineva,Senior Analyst,Geoeconomics Program,Center for the Study of DemocracyCanadaInformation and Communications Technology Council(ICTC)http:/www.ictc-ctic.

26、caAnne M.Patterson,Chief Research and Communications OffjcerChileUniversidad de Chile,Facultad de Economa y Negocios(FEN)http:/www.fen.uchile.clDr.Enrique Manzur,Vice DeanDr.Sergio Olavarrieta,Vice PresidentDr.Pedro Hidalgo,Associate ProfessorPartner InstitutesWe would like to express our deep appre

27、ciation for the contribution of our Partner Institutes,enabling an extensive coverage of competitiveness in their home countries.The following Institutes and people supplied data from national sources and helped distribute the survey questionnaires:7ChinaChina Institute for Development Planning,Tsin

28、gua University http:/Dr.Gong Pu,Assistant Professor and Director of Research Dr.Yang,Yongheng,Professor&Deputy Dean Dr.Wang,Youqiang,Professor Huang,Suyuan,ViceDirector of Research Bi,Shiyao,MA Candidate Jin,Shiyao,Research Assistant Dr.Lang,Yu,Postdoctoral Fellow Dr.Su,Chaoyang,Postdoctoral Fellow

29、Tang,Yuwen,MA Candidate Yu,Hanying,MA Candidate Zhu,Siyao,PhD CandidateColombiaNational Planning Departmenthttp:/www.dnp.gov.coAlexander Lopez Maya,General Director,Department of National Planning(DNP)Mnica Lorena Ortz Medina,Technical Director,Innovation and Private Sector Development-DNPCroatiaNat

30、ional Competitiveness CouncilIvan Mieti,Acting PresidentBiserka Sladovi,AdvisorHrvoje Stoji,Chief EconomistCroatian Employers Associationhttps:/www.hup.hrIva Tomic,PhD,Chief EconomistCyprus Cyprus Employers and Industrialists Federationhttp:/www.oeb.org.cy Antonis FrangoudisEconomics Research Centre

31、,University of Cyprushttp:/ucy.ac.cy/erc/en Sofronis Clerides,Professor of Economics Nicoletta Pashourtidou,Assistant Director Denmark Confederation of Danish Industryhttp:/www.danskindustri.dk/englishAllan Srensen,Chief EconomistEstoniaEstonian Institute of Economic Research(EKI)http:/www.ki.ee/enP

32、eeter Raudsepp,Member of the Board Bruno Pulver,Member of the Board Enterprise Estonia(EAS)https:/eis.ee/en Helery Tasane,Head of Strategy and AnalysisFinlandETLA Economic Researchwww.etla.fjDr.Ville Kaitila,ResearcherPivi Puonti,Head of ForecastingAki Kangasharju,Managing DirectorGhana Management D

33、evelopment and Productivity Institutehttp:/www.mdpi.gov.ghProfessor Elijah Yendaw,Ag.Director General Ethel Ansah-Antwi,Ag.Director,Consultancy Unit Stephen Asirifj Essel,Consultancy UnitGreece Federation of Industries of Greece(SBE),Thessaloniki sbe.org.grDr.Christos Georgiou,Director Research&Docu

34、mentation Dept.Constantinos Styliaras,Economist,Research and Documentation DepartmentFoundation for Economic and Industrial Research(FEIR/IOBE),Athens http:/iobe.gr/default_en.aspSophia Stavraki,Research AssociateHong Kong SARHong Kong Trade Development Council http:/Wing Chu,Principal EconomistCher

35、ry Yeung,Senior EconomistCathy Kwan,Senior Research Executive 8Hungary ICEG European Center,Budapest http:/icegec.org Renata Jaksa,Director Oliver Kovacs,Senior Research FellowNational University of Public Service www.uni-nke.huDr.Magdolna Csath,Private ProfessorIcelandIcelandic Chamber of Commerce,

36、Reykjavikhttp:/www.chamber.isBjrn Brynjlfur Bjrnsson,Managing Director Gunnar lfarsson,Chief EconomistIndiaNational Productivity Council,New Delhi http:/www.npcindia.gov.inRajesh Sund,Director&Group Head(Economic Services)Indonesia Lembaga Management,Faculty of Economics and Business,Universitas Ind

37、onesia(LM FEB UI),JProf.Dr.Ir.T.Ezni Balqiah,M.E.,M.H.,Director of Research and Consulting Dr.Nurdin Sobari,Senior Researcher Dr.Willem A.Makaliwe,Senior Researcher Bayuadi Wibowo,Senior Researcher AA Dwi Mustia Dewi,Researcher Annisa Pratiwi,ResearcherNuPMK Consulting,Jakartahttp:/nupmk.co.idTini M

38、oeis,Managing DirectorDevi Ria Dinanti,Chief Marketing OffjcerIreland IDA Ireland,Investment and Development Agencyhttp:/Malgorzata Ferraz,Planning Manager Japan Keizai Doyukai,Japan Association of Corporate Executiveshttps:/www.doyukai.or.jp/enKatsumi Miyazaki Mitsubishi Research Institute,Inc.,Tok

39、yo Research Centre for Policy and Economy https:/www.mri.co.jp/en/index.html Dr.Hirotsugu Sakai,Research DirectorJordan Ministry of Planning and International Cooperationhttp:/www.mop.gov.joOmar Fanek,National Policies Support Department Director Mira Mango,Head of the Competitiveness and Internatio

40、nal Indices DivisionKazakhstanEconomic Research Institute,JSC of the Ministry of National Economy of the Republic of Kazakhstan,Astanalttps:/eri.kzKymbat Aklmetzlanova,Director,Center for Strategic AnalysisAssel Tasbauova,Deputy DirectorNatalya Novokslanova,Deputy DirectorAimira Sabugaliyeva,Lead Ex

41、pertKenyaNational Productivity and Competitiveness Centrehttps:/saraka.info/ministries/labour-and-social-protection/labour-and-skill-development/npcc/George E.G.Njiru,Principal Productivity Offjcer Dr.Nahashon Moitaleel,DirectorKorea Korea Chamber of Commerce and Industry(KCCI)http:/ Cho,Deputy Dire

42、ctorKorea Institute for International Economic Policy(KIEP)https:/www.kiep.go.kr/eng/Jiyun Lee,Researcher,International Macroeconomics Team Dr.Hayun Song,Associate Research Fellow,International Macroeconomics TeamPartner Institutes9Kuwait Kuwait Anti Corruption Authority(Nazahaa)https:/www.nazaha.go

43、v.kwDhari Buyabes,Head of International Organizations and Conferences,International Cooperation DepartmentLatviaUniversity of Latvia,Faculty of Economic and Social Sciences,Centre for European and TransitionStudies-CETShttp:/www.lu.lv/cetsDr.Zane Zeibote,DirectorProf.Dr.Tatjana Muravska,Honorary Dir

44、ectorLithuaniaInnovation Agency Lithuaniahttps:/innovationagency.ltKotryna Tamoeviien,Head of Research and Analysis UnitIndr ebrauskait,Senior AnalystLuxembourg Luxembourg Chamber of Commerce https:/www.cc.lu/enSidonie Paris,Senior Economist Anthony Villeneuve,Senior Economist Christel ChatelainMala

45、ysia Malaysia Productivity Corporationhttp:/www.mpc.gov.my Zahid Ismail,Director General Dr.Mazrina Mohamed Ibramsah,Deputy Director General Dr.Mohamad Norjayadi Tamam,Deputy Director General Wan Fazlin Nadia Wan Osman,Director Mohammed Alamin Rehan,Director Shanthini TamadoramMexico Center for Stra

46、tegic Studies for Competitivenesshttp:/www.ceec.edu.mxCarlos Maroto Espinosa,General Manager Mongolia Economic Policy and Competitiveness Research Center http:/www.ecrc.mn Tsagaan Puntsag,Founder and Chairman of Board Lakshmi Boojoo,Director General Odonchimeg Ikhbayar,Deputy Director,Head of Resear

47、ch Ganbat Chuluun,Research Economist Tungalag Erdenebat,Research Economist Mungunjiguur Battsolmon,Research EconomistNamibiaNamibia Investment Promotion and Development Board https:/Dr.Nangula Nelulu Uaandja,Chief Executive Offjcer Margareth Gustavo,Executive:Competitiveness&BrandingNetherlandsConfe

48、deration of Netherlands Industry and Employers(VNO-NCW),Netherlands www.vno-ncw.nlThomas GrosfeldTim ZandbergenNew Zealand Auckland Business Chamber https:/aucklandchamber.co.nzSimon Bridges,Chief Executive OffjcerNigeriaNational Productivity Centre,Nigeria https:/productivity.gov.ng/Dr.Baffa Babba

49、Dan Agundi,Director-General Dr.Adejoh David Onuche,Director,Productivity Measurement&IndexOmanNational Competitiveness Offjce,Oman https:/www.nco.omDr.Fahad Rashid Saif Al Jahwari,Director Abdulrahman Al Hinaai,Head of National Account Indicators Department,National Centre for Statistics and Informa

50、tion Jawaher Al Habsi,Statistical Data Analyst 10Peru CENTRUM PUCP https:/centrum.pucp.edu.pePercy Marquina,General Director Dr.Luis Del Carpio,Director of Programs Beatrice Avolio,General Director Victor Fajardo,Researcher Jos Calsina,Research AssistantPhilippines Asian Institute of Management R.S.

51、N.Policy Center for Competitiveness(AIM RSN PCC)https:/aim.edu/research-centers/rizalino-s-navarro-policy-center-competitivenessProf.Jamil Paolo S.Francisco,Executive Director Christopher Caboverde,Research ManagerHauvre Somova,EconomistPoland SGH Warsaw School of Economics https:/www.sgh.waw.pl/enP

52、rof.Marzenna Weresa,Dean Dr.Anna Dzienis,Adjunct ProfessorPortugal Porto Business School,University of Porto,Portohttps:/www.pbs.up.ptJos Esteves,DeanCtia Santana,Project OffjcerProf.lvaroAlmeidaProf.DanielBessa Prof.FilipeGrilo Prof.Jos LusAlvim Prof.Joo Loureiro Prof.Patrcia Teixeira Lopes Puerto

53、RicoPuerto Rico Department of Economic Development and Commercehttps:/www.desarrollo.pr.gov/Hon.Sebastin Negrn Reichard,Secretary for Economic Development&Commerce Jos L.Rivera Rivera,Economist-Director for Economic Analysis&Business Intelligence Invest Puerto Rico https:/www.investpr.org John Bozek

54、,Chief Strategy and Research Offjcer Puerto Rico International Competitiveness Center https:/www.uagm.edu/es/division-de-negocios-turismo-y-emprendimientoFrancisco Montalvo Fiol,Adjunct Professor,Doctoral ProgramQatar National Planning Councilhttp:/www.npc.qaAhmed Alsumaiti,Director of International

55、 indicator&International Cooperation Dep.Hissa AL-Assiry,Project ManagerRomaniaCIT-IRECSON Center of Technological Information https:/cit.irecson.roDr.Bogdan Ciocanel,Phd,DirectorDan Grigore,EconomistSaudi ArabiaNCC,National Competitiveness Centerhttps:/www.ncc.gov.sa/en/Pages/default.aspxH.E.Dr Eim

56、an AlMutairi,CEO of National Competitiveness Center Waleed AlRudaian,Vice President Salman M.AlTukhaifj,General Manager of Analytics&Business Intelligence Partner Institutes11SingaporeMinistry of Trade and Industryhttp:/www.mti.gov.sgSingapore Business Federation https:/www.sbf.org.sgEdwin Heng,Dire

57、ctor,Research and publishing Lim Kai Yun,Assistant Manager,Research&PublishingSlovak Republic Institute of Freedom and EnterpriseJn Oravec,ChairmanSloveniaInstitute for Economic Researchhttps:/www.ier.si/enPeter Stanovnik,President Sonja UriUniversity of Ljubljana,School of Economics and Businesshtt

58、p:/www.ef.uni-lj.si/enMateja Drnovsek,Full ProfessorSouth AfricaProductivity SAwww.productivitysa.co.zaAmelia Naidoo,Acting Chief Executive Offjcer Sebolelo Juliet Mashabela,Acting Chief EconomistSpain Spanish Confederation of Employers https:/www.ceoe.es/es Edita Pereira,Head of Economic Research U

59、nit Paloma Blanco,Economic Research UnitTaiwan(Chinese Taipei)National Development Councilhttp:/www.ndc.gov.twKao,Shien-Quey,Deputy Minister Chiu-Ying Chiu,Director of Economic Development Department Wang,Chen-Ya,Executive Offjcer Thailand Thailand Management Associationhttp:/www.tma.or.thWanweera R

60、achdawong,Chief Executive Offjcer Pornkanok Wipusanawan,Director TMA Center for Competitiveness Tossanun Preratipoomsret,Manager,TMA Center for CompetitivenessTrkiye TUSIAD Turkish Industry and Business Association,Economic Research Departmenthttp:/www.tusiad.orgGizem ztok Altnsa,Chief Economist Yih

61、it Baat imek,Directorİsmet Tosunohlu,Economistİrem Sipahi,Senior ExpertUnited Arab Emirates Federal Competitiveness and Statistics Centre(FCSC)http:/fcsc.gov.ae/Venezuela National Council to Investment Promotion(CONAPRI)http:/www.conapri.orgDr.Juan Cabral,Executive DirectorJennyn Osorio,Economics Af

62、fairs ManagerLilian Zambrano,Manager of Legal AffairsThis booklet is just a summary.Tle complete Yearboo wptl full profjles and all tle statpstpcs is available digitally and in print.Visit our eShop:www.wcceshop.orgAnalysis1314The macroview:2025Professor Arturo Bris WCC DirectorExchange rates have b

63、ecome a double-edged sword in the struggle for competitiveness.On the one hand,currency values are deviating sharply from economic fundamentals,creating winners and losers in international trade.The US dollar has surged well above its fair-valued level against a broad basket of currencies,buoyed by

64、higher US interest rates and safe-haven capital infmows.In contrast,other major currencies have weakened dramatically amid deliberate efforts to support exports.Such misalignments distort global competitiveness by making some countries exports artifjcially cheap and others expensive,regardless of pr

65、oductivity.Managing currency risk in a precarious global system The year 2025 fjnds the world economy at an infmection point,marked by turbulence and fragmentation.A series of overlapping major global events from the COVID-19 pandemic to the war in Ukraine to the US election have upended decades of

66、steadily increasing global integration.Policymakers and business leaders face an environment defjned by volatile currency swings,shifting trade alliances,resurgent protectionism,infmationary spikes,and heightened geopolitical tensions.Global growth has remained stable yet underwhelming,with a balanc

67、e of risks tilted to the downside:geopolitical fmare-ups,fjnancial market volatility,and stalled disinfmation all threaten to derail a smooth economic landing.It is crucial for any economy or enterprise striving to remain competitive amid uncertainty to be aware of the broad global challenges and st

68、rategic lessons,which currently range from currency to trade realignments.Todays decision-makers need a nuanced understanding of the evolving landscape and potential responses.Todays competitive landscape is like no other this generation has lived in;traditional economic powerhouses face unprecedent

69、ed challenges from emerging economies that have successfully implemented strategic reforms.The most competitive nations demonstrate adaptability,forward-thinking governance,and the capacity to navigate both digital and ecological transitions while maintaining social cohesion.At the same time,currenc

70、y volatility has spiked,adding another layer of uncertainty.Rapid swings,driven by shifting monetary policies and geopolitical risk sentiment,complicate planning for fjrms that operate across borders.The global fjnancial architecture amplifjes these effects:with the US dollar entrenched as the prima

71、ry reserve and trade currency,US Federal Reserve policy changes reverberate worldwide.As a result,misalignments are globalized:when the dollar overshoots,entire supply chains and fjnancing arrangements feel the strain.15In response to both volatility and sanction risks,a number of countries have beg

72、un diversifying away from the dollar.Managing currency risk has become a strategic priority.For governments,this may entail coordinated interventions or reforms to the international monetary system;for businesses,sophisticated hedging and pricing strategies are now essential.In a fragmented world ec

73、onomy,exchange rates are more than just prices;they are geopolitical battlegrounds and barometers of trust.The data reveals that economies with strategic currency management policies have generally maintained stronger positions in competitiveness rankings.Small,export-oriented nations with sophistic

74、ated fjnancial sectors have developed particularly effective tools for navigating currency turbulence.Several Asian economies have demonstrated remarkable resilience by maintaining stable monetary policies despite external pressures.Conversely,countries that have allowed persistent currency misalign

75、ments without compensatory productivity gains have seen their competitiveness positions erode.Currency stability has emerged as a cornerstone of economic resilience,particularly for smaller economies dependent on international trade and investment fmows.Nations with pragmatic central banks that bala

76、nce exchange rate considerations with infmation management have created favorable environments for business planning and investment.7JPMVXYG7 IndexCurrency volatility has jumped to multiyear highsJPMVXYEM Index89101112Source:BloombergSVB and Credit Suisse collapseQ1 23Q2 23Q3 23Q4 23Q1 24Q2 24Q3 24Q

77、4 24Q1 25Q2 2516The macroview:2025One of the clearest signs of a fragmenting world economy is the reorganization of global trade networks.The era of effjciency and cost optimization alone dictating supply chains is waning.By contrast,considerations of resilience,security,and geopolitics are becoming

78、 increasingly paramount.Nations are trading more within ideologically aligned blocs,and tariffs,quotas,and sanctions now exert pressure on a growing share of global goods trade.These protectionist currents have been accompanied by a strategic business response:fjrms are redesigning supply chains for

79、 robustness rather than the lowest cost.A signifjcant proportion of global companies are actively pursuing geographic diversifjcation sourcing inputs from multiple regions to avoid over-reliance on any single country.Other companies are engaging in regionalization or friendshoring,moving production

80、closer to home or to politically allied nations.This shift is driven not only by geopolitics but also by hard lessons from recent shocks:a pandemic that disrupted far-fmung suppliers,natural disasters amplifjed by climate change,and transport bottlenecks that revealed the fragility of just-in-time m

81、odels.However,the process of diversifying or relocating production is a complex,multi-year endeavor.Many fjrms remain cautious,acting only when necessary,rather than proactively.Early evidence suggests this fragmentation is creating a more regionalized trade landscape,potentially sacrifjcing some ef

82、fjciency for greater security.Supply clain diversifjcation and relocation in anticipation of further trade fragmentationThe long-term cost of severe fragmentation could be substantial,leading to a global economy that grows more slowly than a united one.Policymakers must navigate this new trade geogr

83、aphy by balancing resilience with openness.That means forging trade agreements among like-minded partners,developing domestic capacities in critical sectors,and avoiding a descent into autarky.Businesses,meanwhile,must build fmexibility into supply chains and invest in regional hubs.The global tradi

84、ng system is being rewired,and those who adapt strategically will be best positioned to compete.Regional economic integration efforts have accelerated as a counterbalance to broader fragmentation.The Association of Southeast Asian Nations(ASEAN)has deepened cooperation,while the African Continental

85、Free Trade Area(AfCFTA)shows promising signs of boosting intra-African trade.Strategic ports and logistics hubs have gained importance,with competitive economies investing heavily in next-generation infrastructure that can process goods effjciently despite trade complexities.Economies that have purs

86、ued deliberate strategies to position themselves as bridging points between trade blocs have shown remarkable resilience in the competitiveness data.These nations have developed specialized capabilities in navigating complex regulatory environments,customs procedures,and compliance requirements that

87、 now characterize international trade.Their companies have become adept at managing fragmentation as a competitive advantage rather than merely a cost center.17The past few years have reintroduced an old foe of competitiveness:high infmation,coupled with the highest interest rates seen in decades.Af

88、ter a long stretch of low and stable prices,the infmationary surge of the early 2020s fed by supply chain disruptions,commodity shocks,and unprecedented stimulus has forced central banks worldwide to tighten policy aggressively.Interest rates in many major economies have surged to record highs for t

89、he post-2008 era.Even as global infmation gradually eases,it remains above target in numerous countries,and price pressures,especially in services,have proven more persistent than expected.Central bankers face the delicate task of taming infmation without choking off growth.Geopolitical fmashpoints

90、or supply shocks could easily trigger renewed price spikes,compelling further rate hikes.High interest rates carry profound implications for competitiveness.Financing costs for fjrms have soared,altering investment calculus Infmation and interest rate volatility:a constant need for managing and sque

91、ezing margins.Companies that grew accustomed to ultra-cheap credit now fjnd capital expenditure and expansion plans more expensive or delayed.Entire economies face weaker growth prospects when rates are restrictive,and the risk of recessions or credit crunches increases.This high-rate environment al

92、so raises debt sustainability concerns.Global debt levels are at record highs,and governments with large public debts see a growing share of budgets diverted to interest payments,limiting fjscal space for investment.Persistently higher real interest rates compound this by adding to fjscal pressure a

93、nd posing fjnancial stability risks.The banking system,too,has felt strain from rate shocks that erode asset values.To maintain competitiveness,governments must pursue prudent fjscal policies and structural reforms that improve productivity.For businesses,the imperative is to improve operational eff

94、jciency and innovate in pricing and product strategy.The winners Source:International Trade CentreThe African Continental Free Trade Area(AfCFTA)was put into force in April 2024.It is the worlds largest free trade area,encompassing 55 countries and 1.3 billion peopleAfCFTA is a pivotal opportunity f

95、or African trade and prosperityAverage tariffs between African countries is11.8%While average tariffs with non-African countries is6.3%of exporters face non-tariff measures63%countries are AfCFTA signatories55 intra-African export potential$22 billion14%of internal African trade is within Regional E

96、conomic Communities67%countries have ratifjed from 8 different Regional Economic Communities41 Internal African trade is onlyin part due to high tariff and non-tariff trade costs18The macroview:2025in this environment will be those who treat infmation and interest-rate volatility not just as challen

97、ges,but as strategic factors to manage through robust risk assessment,adaptable budgeting,and investment in productivity enhancements.The competitiveness data reveals signifjcant divergence in how economies have managed the infmation challenge.Nations with sophisticated fjnancial infrastructure and

98、deep capital markets have generally weathered the storm better,enabling their businesses to access fjnancing despite tighter conditions.Several smaller European economies have used targeted fjscal approaches rather than broad stimulus to support strategic sectors without stoking infmationary pressur

99、es.In Asia,economies with higher domestic savings rates have shown greater resilience to global fjnancing constraints.An interesting pattern has emerged where economies with strong institutional frameworks for coordinating monetary,fjscal,and structural policies have maintained their competitive adv

100、antage.These whole-of-government approaches have allowed for more nimble responses to infmation without sacrifjcing growth potential.High-performing economies have also accelerated productivity-enhancing investments precisely when fjnancing became more expensive a counter-cyclical strategy that posi

101、tions them for stronger recoveries.World Economic Outlook Growth Projections(Real GDP,annual percent change)World OutputAdvanced EconomiesUnited StatesEuro Area20241.73.22.80.8Estimate20251.93.32.71.0Projections20261.83.32.11.4GermanyFrance-0.21.10.30.81.11.1ItalySpain0.63.10.72.30.91.8JapanUnited K

102、indom-0.20.91.11.60.81.5CanadaOther Avanced Economies1.32.02.02.12.02.3Emerging Market and Developing EconomiesEmerging and Developing AsiaChina4.25.24.84.25.14.64.35.14.5IndiaEmerging and Developing Europe6.53.26.52.26.52.4RussiaLatin America and the Caribbean3.82.41.42.51.22.7BrazilMexico3.71.82.2

103、1.42.22.0Middle East and Central AsiaSaudi Arabia2.41.43.63.33.94.1Sub-Saharan AfricaNigeria3.83.14.23.24.23.0South AfricaMemorandum0.8 1.5 1.6 Emerging Market and Middle-Income EconomiesLow-Income Developing Countries4.24.14.24.64.25.4Source:Intenational Monetary Fund(IMF),World Economic Outlook Up

104、date,January 202519Another defjning feature of the current landscape is the resurgence of economic nationalism,as governments prioritize domestic interests sometimes at the expense of global integration.Protectionist policies tariffs,import quotas,export bans,localization requirements,and subsidies

105、favoring home industries have proliferated.From semiconductors to vaccines,countries are invoking national security or strategic autonomy to justify intervention in markets.This protectionist wave has been bolstered by new forms of economic nationalism,including digital protectionism,currency interv

106、entions,and expansive industrial policies.Even traditionally free market economies have passed subsidy-laden laws aimed at onshoring production of critical goods.While these policies intend to bolster national competitiveness,they risk a zero-sum race that provokes retaliation and reduces trust.From

107、 a global perspective,rising protectionism poses a collective action problem.Short-term domestic gains may come at the cost of long-term effjciency and global welfare.The political economy has shifted,and protectionist measures are often popular even when counterproductive.The result is a fragmentat

108、ion into trading blocs,each fortifjed by its own rules and standards.Businesses must adapt to a world of frequent policy shifts and trade barriers.Corporate strategy must account for tariff costs,export restrictions,and varying regulatory regimes.Supply chain agility the ability to reroute productio

109、n or sourcing quickly is becoming Adapting to economic nationalism and protectionist policies a core competency.Governments,meanwhile,must protect critical interests while investing in the underlying drivers of competitiveness:education,infrastructure,innovation,and macroeconomic stability.The chall

110、enge is to avoid a descent into isolationism that diminishes competitiveness for all.The competitiveness data highlights an important paradox:the most competitive economies are not those that have embraced pure economic nationalism,but rather those implementing smart protectionism targeted policies

111、in strategic sectors while maintaining general openness.These nations have achieved a delicate balance between protecting vital industries and preserving the dynamism that comes from international competition.East Asian economies have particularly excelled at crafting industrial policies that enhanc

112、e competitiveness without triggering signifjcant retaliation.Their focused approach to developing strategic capabilities in advanced manufacturing,particularly in semiconductors,biotechnology,and renewable energy,has created powerful competitive advantages.Meanwhile,several Gulf states have leverage

113、d their fjnancial resources to build new competitive industries while maintaining open investment environments.The most successful economies have coupled sector-specifjc protections with ambitious domestic reform agendas to enhance productivity.This dual approach protecting where necessary while str

114、engthening where possible has proven more effective than either pure nationalism or unqualifjed openness.20The macroview:2025The post-pandemic period has accelerated digitalization across all economic sectors,creating a signifjcant competitive divide between digital leaders and laggards.Leading econ

115、omies have leveraged artifjcial intelligence,automation,and big data to enhance productivity across manufacturing and service sectors.They have built robust digital infrastructures including high-speed connectivity,cloud computing capabilities,and advanced cybersecurity frameworks that form the back

116、bone of modern competitiveness.These digital capabilities have proven particularly crucial in mitigating the impacts of trade fragmentation by enabling exports of services that are less vulnerable to physical supply chain disruptions.Being a leader not a laggard in digital transformation and innovat

117、ion ecosystems The competitiveness data demonstrates a strong correlation between digital readiness and overall competitive performance.Economies with high adoption rates of advanced digital technologies have generally maintained or improved their positions,while those with digital infrastructure ga

118、ps have struggled to keep pace despite strengths in other areas.Innovation ecosystems have become increasingly important as drivers of competitiveness.Economies that have built dense networks connecting universities,research institutions,venture capital,and established enterprises have generated dis

119、proportionate economic returns.These ecosystems are characterized by effective Trade volume growtl rate by region,next fjve years(composite forecast)vs.last fjve years2019 2024South&Central Asia ASEAN Middle East&North Africa China S.&C.America,Caribbean North America Rest of East Asia&Pacifjc Europ

120、e Sub-Saharan Africa1244567893.9%3.6%2.9%2.9%2.6%2.2%1.5%1.0%0.8%2024 2029South&Central Asia Sub-Saharan Africa ASEAN Middle East&North Africa S.&C.America,Caribbean China Rest of East Asia&Pacifjc North America Europe1234567895.6%5.3%5.0%3.9%3.3%2.8%2.7%2.7%2.7%The fastest trade volume growth from

121、2024 to 2029 is forecast in South Asia,Sub-Saharan Africa,and Southeast Asia.Data Sources:Economist intelligence Unit,IMF World Economic Outlook,Oxford Economics,and S&P Global Market Intelligence.21Environmental sustainability has emerged as a critical dimension of competitiveness in 2025.As climat

122、e policies tighten globally and consumers increasingly favor sustainable products,economies ability to decarbonize while maintaining growth has become a key differentiator.Leading nations have developed sophisticated green fjnance mechanisms that channel capital toward low-carbon investments,built r

123、enewable energy infrastructure that provides reliable and increasingly cost-competitive power,and implemented carbon pricing systems that incentivize effjciency without unduly burdening industry.The competitiveness data shows that economies at the forefront of the green transition are capturing grow

124、ing shares of rapidly expanding markets for clean technologies,sustainable materials,and environmental services.Their companies are less exposed to climate transition risks and better positioned to meet increasingly stringent environmental standards in export markets.Transforming green imperatives f

125、rom regulatory burdens to sources of competitive advantageCompanies in sectors like technology,media,telecom,and waste recycling are generally considered less exposed to climate transition risks;they have lower carbon footprints and are less reliant on carbon-intensive processes.Climate transition r

126、isks are unanticipated gains or losses due to an unexpectedly quick transition toward a carbon-neutral economy.Drivers of climate transition risk are technological shocks to the productivity and cost structure of key low-carbon technologies.Another driver is regulation;the unexpected announcement of

127、 a wide-ranging CO2 tax or green subsidies would signifjcantly accelerate the low-carbon transition.Several European economies have leveraged their early moves toward sustainability into meaningful competitive advantages,with their fjrms becoming global leaders in renewable energy systems,circular e

128、conomy solutions,and green hydrogen technologies.Meanwhile,resource-rich nations that have proactively diversifjed toward sustainable industries are showing greater resilience than those maintaining traditional economic models.knowledge transfer mechanisms,sophisticated intellectual property regimes

129、,and cultures that tolerate risk and failure as part of the innovation process.Interestingly,several mid-sized economies have successfully developed specialized innovation hubs that punch above their weight in specifjc technological domains.These focused strategies have proven effective at building

130、competitive niches even for countries that cannot match the scale of the largest innovation powerhouses.The most competitive small nations have excelled at creating regulatory sandboxes and experimental policy frameworks that attract innovative fjrms seeking environments to test and scale up new tec

131、hnologies.22The macroview:2025Particularly noteworthy are economies that have pursued just transition approaches that maintain social cohesion while transforming energy systems.These nations have implemented comprehensive retraining programs,targeted regional development initiatives,and inclusive st

132、akeholder processes that build broad support for environmental policies.TotalEnergies1RevenueUS$263.20bnTop 10 European Renewable Energy CompaniesHQ LocationFranceWCR 202532EDF2US$99.57bnFrance32Engie3US$99.57bnFrance32Fortum Corp4US$93.68bnFinland14rsted5US$18.81bnDenmark4Vestas6US$14.50bnDenmark4

133、Acciona SA7US$8.10bnSpain39Iberdrola8US$57.21bnSpain39Enel Green Power S.p.A.9US$9.72bnItaly43Scatec ASA10US$0.4bnNorway12Source:Energy Evolution Conference23To remain competitive in a fragmented world,both governments and fjrms must adopt a resilience-oriented mindset.Rather than being paralyzed by

134、 crises or chasing short-term fjxes,successful leaders proactively build the capacity to thrive in volatility.Several strategic imperatives are emerging today:1.Build agility and crisis resilience:The ability to pivot quickly and adapt is paramount.Governments should streamline decision-making to re

135、spond to shocks.Businesses should embed agility into their culture,empower teams to act decisively and develop crisis response playbooks.2.Make infmation and currency volatility strategic clallenges:Leading fjrms treat infmation and exchange rate swings as strategic problems to solve.This may involv

136、e innovative pricing strategies,fjnancial hedging,and market diversifjcation.Governments can support credible policy frameworks and fjnancial tools.3.Avoid reactive slort-termism:Leadership must resist panic-driven cost-cutting or paralysis.Strategic focus on long-term competitiveness,even amid cris

137、is,ensures sustained innovation,talent development,and market positioning.4.Foster collaboration and knowledge-sharing across borders:Global challenges require collective approaches.Businesses and governments should seek partnerships,share best practices,and promote cross-border learning to accelera

138、te adaptation and innovation.5.Invest in long-term competitiveness drivers:Education,infrastructure,digital capability,and innovation ecosystems form the backbone of enduring competitiveness.Policymakers and businesses alike must keep investing in these fundamentals.Remaining competitive in a fragme

139、nted world:building resilience6.Develop sectoral strategic autonomy:Rather than pursuing complete self-suffjciency,competitive economies are identifying truly strategic sectors where domestic capacity is essential while maintaining interdependence in other areas.This targeted approach to resilience

140、focuses resources where sovereignty matters most.7.Build luman capital for complex clallenges:The most competitive economies are investing heavily in education systems that develop not just technical skills but also adaptability,critical thinking,and creative problem-solving.These cognitive capabili

141、ties become increasingly valuable as routine tasks are automated,and complex challenges proliferate.8.Create anticipatory governance models:Forward-looking governments are implementing horizon-scanning capabilities,scenario planning processes,and adaptive policy frameworks that can identify emerging

142、 challenges before they become crises.This anticipatory governance provides competitive advantages in a volatile world.9.Foster trust-building institutions:Economic fragmentation is ultimately a trust defjcit at the international level.Nations that invest in multilateral dialogue,transparent regulat

143、ory processes,and credible policy commitments can build islands of trust that facilitate economic exchange despite broader tension.10.Balance technological self-reliance with openness to innovation:The most competitive economies are fjnding ways to protect core technological capabilities while maint

144、aining suffjcient openness to benefjt from global innovation.This delicate balance requires sophisticated technological governance frameworks.24Understanding the drivers of global fragmentation through executives perceptions Jos Caballero WCC Senior EconomistCompetitiveness goes beyond economic perf

145、ormance.It encompasses the capacity of a country to develop and maintain an environment that sustains long-term value creation and the well-being of its citizens.Countries that build such an environment are able to reach high levels of competitiveness.In such a context,societal polarization in the f

146、orm of socio-economic and political fragmentation(e.g.,income inequality,political fragmentation,and social exclusion)becomes a crucial factor for performance and stability.Income inequality,for example,signifjcantly undermines social cohesion,which is essential for a stable and productive economic

147、environment.Furthermore,social inclusion is negatively related to income inequality.In addition,social capital a combination of trust and civic engagement and social mobility are fundamental for societal cohesion.Countries with high income disparities often experience diminished trust in institution

148、s and reduced civic participation.Such countries present fragmented societies that hinder any collective efforts necessary for the advancement of competitiveness.Moreover,income inequality can lead to increased social tensions and unrest,which deter investment and disrupt overall economic activities

149、.In addition,societies experiencing signifjcant income disparities face challenges in implementing effective policies and reforms,as the lack of consensus and trust among stakeholders hinders such efforts.For instance,Venezuela and Argentina experience social fragmentation as a result of income ineq

150、ualities.In turn,such conditions affect their overall competitiveness.1 Similarly,political polarization often results in policy volatility,which leads to an unpredictable investment climate.The latter deters both domestic and foreign investment.More specifjcally,policy stability is central to build

151、ing a context conducive to competitiveness.In other words,constant shifts in regulatory frameworks due to political discord can lead to an unpredictable investment climate.Such policy uncertainty can cause investors to adopt a wait-and-see approach or redirect their investments to more stable enviro

152、nments.2 Results from the 2025 IMD World Competitiveness Ranking reveal that countries exhibiting lower levels of socioeconomic and political polarization often achieve higher competitiveness scores.For example,Switzerland consistently ranks at the top of the ranking,with a concomitant robust perfor

153、mance in inclusive social policies,political stability,and strong institutional frameworks.Likewise,Denmark and Sweden also perform strongly in the overall rankings and exhibit robust commitment to social equity and cohesive governance structures.As we witness a constant rise in societal polarizatio

154、n around the world,the competitiveness of affected countries is increasingly at risk.In this essay,we trace the rise of polarization and its drivers.We analyze the opinions of senior business executives in 69 countriesdata gathered as part of the Executive Opinion Survey employed in the methodology

155、of the competitiveness ranking about those factors that contribute most to polarization.1 See Bris,A.(2014).Social Cohesion Why it matters.IMD World Competitiveness Center.Available from https:/www.imd.org/research-knowledge/competitiveness/articles/com-april-2014/2 See Cabolis,C.(2020).Strong insti

156、tutions alleviate uncertainty.IMD World Competitiveness Center.Available from https:/www.imd.org/research-knowledge/competitiveness/articles/com-january-2020/Corruption,Democracy,and Political Uncertainty.IMD World Competitiveness Center.Available from https:/www.imd.org/research-knowledge/competiti

157、veness/articles/com-february-2019/25Societal polarization,characterized by deepening divisions along socioeconomic,cultural,and political/ideological lines,has become increasingly prominent in contemporary societies.Such a phenomenon is not limited to any country,but we can observe it globally.It ca

158、n take several forms including political fragmentation,economic disparities,and social exclusion.Understanding the current trends in societal polarization is crucial because it impacts democratic processes,social cohesion,public trust,and ultimately competitiveness.In the current global context,we o

159、bserve a growing animosity between individuals with opposing political affjliations.Frictions extend beyond disagreements on policy issues to include personal disdain and mistrust.Trends in this type of polarization,referred to as affective polarization,have been particularly documented in the US,wh

160、ere citizens increasingly view members of the opposing party not just as adversaries but as threats to the countrys well-being.Such polarization is not solely a product of social media trends but has roots in earlier media development in the US,such as the proliferation of partisan cable news and ta

161、lk radio.Research 1.Current trends in societal polarization indicates that affective polarization is particularly pronounced among older demographics,who are more engaged with traditional media sources.3 Media consumption thus becomes key for understanding societal polarization.4 At the core of soci

162、etal polarization are income inequalities and the resulting cultural backlash against“progressive”cultural shifts that some members of society see as a danger to their longstanding traditions and social status.5 The decline of certain types of jobs(e.g.,manufacturing)and the rise of a service-orient

163、ed economy have disproportionately affected working-class individuals.The latter feel disenfranchised and resent those who benefjt from the current economy.Segments of the working class have thus undergone economic dislocation,which has greatly contributed to the ongoing hostility toward cultural ch

164、anges.In this context,progress in equality and diversity is perceived by the negatively affected individuals as a zero-sum game that threatens their socioeconomic standings.Such sentiments are often amplifjed by social media,which creates echo chambers that reinforce existing beliefs,biases,and grie

165、vances We found that societal polarization is no longer a phenomenon confjned to unstable democracies or confmict-prone societies.The perceptions of executives suggest that societal polarization is driven by multiple overlapping issues.These drivers cut across income levels,regions,and political sys

166、tems.Specifjcally,business executives do not perceive polarization as an isolated crisis but as a systemic fault line in the current global governance system.3 Kleinfeld,R.(2023).Polarization,Democracy,and Political Violence in the United States.Working paper,Carnegie Endowment for International Pea

167、ce.4 See Kubin,E.,&Von Sikorski,C.(2021).The role of(social)media in political polarization:a systematic review.Annals of the International Communication Association,45(3),188-206;and Trnberg,P.(2022).How digital media drive affective polarization through partisan sorting.Proceedings of the National

168、 Academy of Sciences,119(42).5 On income inequalities and cultural backslash see Inglehart,R.F.,&Norris,P.(2016).Trump,Brexit,and the rise of populism:Economic have-nots and cultural backlash.HKS Faculty Research Working Paper Series RWP16-026.26Understanding the drivers of global fragmentation thro

169、ugh executives perceptions As discussed above,polarization is a defjning feature of the current global economy.For this reason,in the 2025 IMD Executive Survey,we asked respondents to identify the leading sources of polarization in the countries in which they reside.While polarization takes differen

170、t forms,it is often driven by shared socioeconomic and political factors.With this in mind,we asked participants to select which among fjve potential causes applied to the conditions in their country(multiple causes could be selected).12 Those causes were social divisions(e.g.,race,religion,ethnicit

171、y),political differences(e.g.,partisan politics),social inequalities(e.g.,economic,educational,racial),economic opportunities(e.g.,jobs,business loans),and unequal access to education and healthcare.Through the opinion of senior executives 2.Societal polarization from the perspective of business exe

172、cutives across 69 countries,we thus explore the underlying drivers of polarization.By analyzing their responses,we gain insights into the structural challenges contributing to societal polarization.The overall analysis of survey responses shows that polarization drivers can be highly contextual to e

173、ach regions development stage,political history,and structural challenges.Moreover,such societal divisions are deeply rooted in historical,economic,and political contexts,and continue to challenge social cohesion and the democratic stability of countries.In Box 1,we present the overall highlights of

174、 executives opinions about the drivers of societal polarization.thus contributing to societal polarization.6 Evidence suggests that such environments not only deepen ideological divides but also hinder constructive dialogue across individuals holding differing political perspectives.7 Polarization i

175、s also evident across generational and demographic lines.Younger individuals,particularly those aged 1824,report higher levels of societal disillusionment and hopelessness.8 Such demographic shift has greatly contributed to the rise of radical right anti-establishment parties,as feelings of alienati

176、on drive political engagement towards more extreme positions.Conversely,older populations tend to exhibit greater contentment with the status quo.There is,in other words,a generational divide in perceptions of societal progress and cohesion.9 A related trend linked to societal polarization is the de

177、cline of social trust and the weakening of democratic norms.As divisions deepen,individuals become more skeptical of institutions,media,and even fellow citizens.Such mistrust erodes the foundations of democratic societies,reducing civic engagement and making some members of society more vulnerable t

178、o extremist ideologies.10 The decline in social cohesion creates a permissive environment for the spread of disinformation and the normalization of violent attitudes,which further exacerbates polarization.11 6 Mahmoudi,A.,Jemielniak,D.,&Ciechanowski,L.(2024).Echo chambers in online social networks:A

179、 systematic literature review.IEEE Access,12,9594-9620.7 See Pranesh,S.,&Gupta,S.(2024).The impact of social media on polarization in the society.arXiv preprint:2408.12877.8 Abou-Chadi,T.(2024).A gendered far-right wave among young voters in Western Europe?.European Journal of Politics and Gender,1-

180、6.9 OGrady,T.(2023).Is ideological polarisation by age group growing in Europe?.European Journal of Political Research,62(4),1389-1402.10 Brady,H.E.,&Kent,T.B.(2022).Fpfty years of declpnpng confjdence&increasing polarization in trust in American institutions.Daedalus,151(4),43-66.11 Khan,S.(2024).T

181、hreats to Social Cohesion and Democratic Resilience:A New Strategic Approach(The Khan Review).12 Tle specpfjc questpon we ased was tle followpng:“Wlpcl of tle following are causing polarization in your society?Choose any/all that apply).”The total number of responses for the 2025 IMD Executive Surve

182、y was 6,162.The social polarization question was optional and only 5,297 executives chose to answer it.27Box 1.Executive survey analysis:Key fjndingsA.Drivers of societal polarization highlights1.Political differences,highest concern(57.6%average)Top 10 countries reporting largest percentages:Brazil

183、(93.9%),Spain(92.5%),Taiwan(89.6%),Slovak Republic(88.6%),Slovenia(87.1%),Argentina(86.8%),Venezuela(85.3%),Philippines(85.1%),Hungary(84.5%),Mexico(84.4%).Higlliglt:Latin American countries dominate,with the largest percentages in this aspect of polarization,suggesting severe political fragmentatio

184、n in the region.2.Social inequalities,second highest(54.3%average)Top 10:Philippines(74.3%),Australia(73.9%),Chile(70.8%),Mexico(70.8%),Namibia(69.7%),Peru(69.3%),South Africa(67.8%),New Zealand(67.5%),China(66.7%),Thailand(65.1%).Higlliglt:The mix of developing and developed countries with large pe

185、rcentages shows that social inequalities are a global concern.3.Economic opportunities,moderate concern(41.1%average)Top 10:South Africa(74.6%),China(68.1%),Indonesia(66.1%),Trkiye(66%),Philippines(64.4%),Puerto Rico(63%),Korea(62.8%),Oman(61.3%),Namibia(60.6%),Venezuela(60.3%).Higlliglt:Emerging ec

186、onomies dominate the top countries,signaling struggles with structural economic challenges.4.Social divisions,variable by region(40.1%average)Top 10:Netherlands(71.2%),Trkiye(70%),Austria(69.1%),South Africa(67.8%),Sweden(66.7%),India(65.4%),Australia(63%),Nigeria(62.7%),Belgium(58.3%),Norway(57.8%)

187、.Higlliglt:Western European countries are prominent in this polarization drivers top results,suggesting that identity issues drive the regions polarization.5.Education and healthcare,lowest concern overall(25.3%average)Top 10:Chile(62.5%),Peru(60.2%),Mexico(57.3%),Venezuela(55.9%),Namibia(54.5%),Phi

188、lippines(49.5%),Trkiye(48%),Brazil(44.7%),Mongolia(43.5%),Colombia(42.7%).Higlliglt:The largest percentages concentrated in Latin America,demonstrating how infrastructure gaps are leading to widening inequalities in the region.B.Regional Insights on Fragmentation Africa Highest regional focus on eco

189、nomic opportunities,with an average of 61%compared to the global average of 41.1%.All six countries score above the global average in economic opportunities,with two countries(South Africa 74.6%and Namibia 60.6%)in the global top 10.Also,the region shows consistently high education/healthcare concer

190、ns(40.9%vs 25.3%global average).These results highlight Africas structural development challenges.Asia Strong representation across multiple categories with four countries in economic opportunities top 10 economies with largest percentages in that category.It shows above average political difference

191、s(56.1%)and social inequalities(57.9%).The latter are probably linked to rapid development transitions and continuous structural challenges.Eastern Europe Highest percentage in political differences after Latin America(70.6%vs 57.6%global average)with three countries in the global top 10,which may s

192、ignal post-transition political tensions.It shows one of the lowest education/healthcare concerns(17.6%vs 25.3%global average).Latin America Reports highest political differences concern globally(81.0%vs 57.6%global average)with four countries in the global top 10.It also dominates in education/heal

193、thcare concerns(49.7%vs 25.3%global average)with six countries in the global top 10.All eight countries score above the global average in political differences,indicating that there are region-wide political fragmentation trends.Middle East Shows moderate economic opportunity concerns(47.3%vs 41.1%g

194、lobal average)with six out of eight countries above the global average,but relatively lower political differences(35.1%vs 57.6%global average).Eastern Europe Dominates the social divisions category(51.1%vs 40.1%global average)with fjve countries in the global top 10,led by the Netherlands(71.2%).It

195、shows the lowest economic opportunity concerns(26.4%vs 41.1%global average).It also displays non-signifjcant levels of inequality of economic opportunities but experiences identity-based polarization challenges.28The countries with the highest percentage of respondents identifying social division as

196、 a primary cause of polarization include the Netherlands(71.2%),Trkiye(70%),and Austria(69.1%).Such trends in these high-income economies show that even in well-developed countries,societal cohesion can be threatened by entrenched cultural,ethnic,or religious divisions.In the case of Austria and the

197、 Netherlands,their high percentages may refmect anxieties linked to immigration,integration,and national identity.Such concerns have intensifjed in recent years.In Trkiye,social divisions may stem from longstanding tensions between secular and religious populations as well as ethnic minorities and t

198、he majority.Similarly,South Africa(67.8%),Sweden(66.7%),and India(65.4%)display high percentages in terms of concerns about social divisions.In South Africa,the legacy of apartheid still shapes present-day group disparities.Meanwhile,India,with its complex social hierarchy and religious diversity,pr

199、esents a multifaceted picture of divisions.The performance of countries like Australia(63%),Nigeria(62.7%),and Belgium(58.3%)suggests that social divisions are a signifjcant issue across different regions and income levels.2.a.Social divisions In contrast,among the countries where social divisions a

200、re least cited as a cause of polarization,Argentina(7.4%),Venezuela(11.8%),and Japan(12.9%)stand out.The notably low percentage in Argentina is particularly interesting,as the same country rates political differences extremely high(discussed below).The latter suggests that executives differentiate s

201、harply between ideological and social divisions.In Venezuela,where economic and institutional crises dominate public debate,respondents may see other drivers like governance breakdowns or economic opportunity deprivation as more immediate.Japans low score may refmect its relatively homogenous societ

202、y,where ethnic or cultural tensions are less prominent.Other countries where social divisions were seldom selected include Thailand(14.2%),Jordan(15%),and Taiwan(Chinese Taipei,16.3%).These results could refmect either stronger societal cohesion or executive perceptions that other structural or inst

203、itutional problems take precedence.Romania(18.3%),Korea,Rep.(19.2%),Hungary(20.6%),and Mexico(22.9%)also show low percentages.The latter suggests that despite ongoing challenges,cultural and/or ethnic divisions are not viewed by elites as the main source of social fragmentation.Understanding the dri

204、vers of global fragmentation through executives perceptions NetherlandsAustriaSwedenBelgiumNorwayTrkiyeSouth AfricaIndiaAustraliaNigeriaMexicoJapanWestern EuropeOther RegionsFigure 1 Social divisions as drivers of polarization,selected countries%of executives identifying the causeGlobal average 40%0

205、%10%20%30%40%50%60%70%80%12.9%22.9%57.8%58.3%62.7%63.0%65.4%66.7%67.8%69.1%70.0%71.2%29Figure 1 presents,for a selected number of countries,the percentages of executives who reported social division as one of the main drivers of polarization.It compares those percentages to the global average(i.e.,t

206、he mean percentage of executives across the 69 countries in the sample who cited social division as a driver of polarization)represented by a vertically bolded line.With this in mind,the fjgure shows that Western European economies dominate the countries with the largest concern about social divisio

207、ns as they strongly deviate from the global average.Such results indicate that in these countries there are widespread perceptions among executives that cultural fragmentation,immigration tensions,and identity-based cleavages are signifjcant sources of societal polarization.Countries from other regi

208、ons,however,show also high concern about social divisions(e.g.,South Africa and India).Political polarization refers to the process by which public opinion splits and goes to ideological extremes.In a politically polarized society,individuals or groups increasingly align with ideologically consisten

209、t positions,typically liberal or conservative.13 However,divisions can also occur between mainstream political parties and radical populist movements,both on the left and on the right.14 Such societies display declining similarities among political positions or moderation among those positions.This

210、divide is often marked by greater animosity between partisan groups,reduced willingness to compromise,and a decline in shared values.Political polarization is reported most strongly in Brazil(93.9%),Spain(92.5%),and Taiwan(89.6%).Such results illustrate the extent to which ideological frictions have

211、 intensifjed globally.In such contexts,high polarization may refmect growing hostility between partisan groups,declining trust in democratic institutions,or challenges related to political instability.Brazils political context,for instance,has seen growing confrontation between populist and progress

212、ive movements,while Spain continues to deal with secessionist pressures and reactionary anti-immigration sentiments.Argentina(86.8%),Venezuela(85.3%),and the Philippines(85.1%)also exhibit deep political fragmentation.2.b.Political differences The performance of Argentina and Venezuela is consistent

213、 with broader trends of populist mobilization and weakening institutional credibility accompanied by a deep ideological entrenchment in parts of Latin America.Conversely,Oman(12.9%),China(14.5%),and Japan(17.7%)report the lowest concern over political fragmentation as a cause of societal polarizatio

214、n.These fjndings likely refmect political systems with strong centralized control,limited pluralism,or limited public dissent.In such systems,polarization may either be subdued by institutional design or perceived as less of a public threat,particularly by elites.Saudi Arabia(18.0%)and Qatar(18.4%)f

215、ollow a similar trend.The list of countries with limited concern about political fragmentation,however,also includes established democracies like Luxembourg(20.3%)and Denmark(29.6%).In the latter,consensus around democratic norms and governance may contribute to low perceptions of political division

216、s.In Figure 2,the global average of executives across the sample who report political differences as a driver of polarization is represented by the middle horizontal line.Each bar in the fjgure shows how far a countrys percentage deviates from the global average of 57.6%.For example,Brazils deviatio

217、n value of+36.3%indicates that 93.9%of executives there cited political differences as a driver of polarization.Brazils value is far above the global 13 Abramowitz,A.I.,&Saunders,K.L.(2008).Is polarization a myth?.The Journal of politics,70(2),542-555.14 Hooghe,L.,&Marks,G.(2018).Cleavage theory mee

218、ts Europes crises:Lipset,Rokkan,and the transnational cleavage.Journal of European public policy,25(1),109-135.30Understanding the drivers of global fragmentation through executives perceptions average.In contrast,Denmarks deviation of-25.6%indicates that only 29.6%of executives in the country view

219、political differences as a primary driver.Such deviations highlight how polarization intensity varies signifjcantly across countries.The fjgure,furthermore,presents a clear divide among countries.Executives in highly polarized environments,particularly in Latin America and Eastern Europe,report exce

220、ptionally high levels of concern regarding political differences.These countries often face institutional distrust,ideological fragmentation,or populist cycles.Conversely,countries in the bottom group tend to exhibit centralized or consensus-based political systems,where polarization is either struc

221、turally contained or less publicly articulated.High polarization,however,can occur in both developed(e.g.,the US)and developing economies(e.g.,the Philippines).BrazilSpainTaiwan(Chinese Taipei)Slovak RepublicSloveniaArgentinaVenezuelaPhilippinesHungaryMexicoColombiaPolandUnited StatesCanadaKorea Rep

222、.ChileJordanPeruKenyaGhanaTrkiyeEstoniaMalaysiaPortugalIndonesiaNetherlandsFranceThailandPuerto RicoCzech RepublicCroatiaIcelandSouth AfricaBelgiumBulgariaGermanyFinlandCyprusAustriaHong Kong SARNigeriaUnited KingdomIndiaGreeceSwitzerlandRomaniaMongoliaItalyLithuaniaNew ZealandBotswanaNamibiaNorwayA

223、ustraliaKuwaitSwedenIrelandLatviaSingaporeDenmarkKazakhstanUnited Arab EmiratesBahrainLuxembourgQatarSaudi ArabiaJapanChinaOman-50%-30%-10%10%30%50%Global average 57.6.2%Top 10 highestBottom 10 lowestFigure 2 Political differences.Deviation from Global Average(%)Other countries31Executives in the Ph

224、ilippines(74.3%),Australia(73.9%),and both Chile and Mexico(70.8%)place particular emphasis on social inequality as a leading driver of polarization.This refmects critical disparities in the distribution of wealth and other resources and the fairness of rewards(e.g.,salaries)among different social g

225、roups and individuals.The high percentages in Australia and New Zealand(67.5%)show that inequality is not just a concern in emerging markets but also in advanced economies.Namibia(69.7%),Peru(69.3%),South Africa(67.8%),and China(66.7%)also display high percentages.The latter results reveal how the l

226、egacies of colonialism,structural poverty,and uneven development continue to defjne socioeconomic patterns.Furthermore,Thailands performance(65.1%)supports the notion that rapid development can coincide with persistent inequalities.2.c.Social inequalities The countries least likely to cite social in

227、equalities as a major source of polarization include Taiwan(21.5%),Iceland(23.6%),and Oman(29.0%).These economies may enjoy relatively high standards of living and social safety nets,or,in the case of Oman,a more centralized resource distribution model.Similarly,Jordan(32.0%)and Canada(34.0%)display

228、 low percentages in this regard.Canadas performance perhaps echoes business executives high levels of confjdence in its universal social services.Other countries with low percentages of citing social inequalities as a cause of polarization include Saudi Arabia,Qatar,Slovenia,and Spain,which may unde

229、rline a mixture of welfare state dynamics and economic affmuence.In Figure 3,we illustrate that social inequalities are a global concern.Specifjcally,such inequalities are not confjned to any one income group or region.Executives from high-income countries like Australia and France report strong con

230、cerns,as do those from upper-middle-income economies such as Mexico and South Africa,and lower-middle-income countries like India and the Philippines.Such widespread distribution of high concerns across income categories refmects the global nature of inequality-related issues.While the root causes m

231、ay vary from historical exclusion to uneven growth or public service gaps,the outcome is a broadly shared perception among respondents that social inequality is a major driver of societal polarization.PhilippinesAustraliaMexicoChileNamibiaPeruSouth AfricaNew ZealandChinaTrkiyeIndiaFranceHigh incomeU

232、pper-middle incomeFigure 3 Social inequalities as a driver of polarization,cross-income sample of countries%of executives identifying the causeGlobal average 54.3%0%10%20%30%40%50%60%70%Lower-middle income56.9%60.6%64.0%66.7%67.5%67.8%69.3%69.7%70.8%70.8%73.9%74.3%32Understanding the drivers of glob

233、al fragmentation through executives perceptions South Africa(74.6%)tops the list with respect to the perceived lack of economic opportunity,alongside China(68.1%),Indonesia(66.1%),and Trkiye(66%).These responses underline the pattern that when economies fail to generate inclusive growth,frustration

234、and alienation rise.The Philippines(64.4%)and Puerto Rico(63%)also reinforce such a trend.Korea(62.8%),Oman(61.3%),Namibia(60.6%),and Venezuela(60.3%)further illustrate concerns about upward mobility and job creation in varied economic settings.2.d.Economic opportunities Among the lowest scorers in

235、economic opportunities are Denmark(11.1%)and Iceland(14.5%)both Nordic countries with strong labor markets and equitable income distribution.Jordan(16%),the Netherlands(19.2%),and Poland(19.7%)also suggest confjdence in job access and economic stability.The presence of Canada(20%),Slovak Republic(20

236、%),Spain(21.5%),Switzerland(22.1%),and Sweden(22.2%)among the lowest scorers highlights the role of strong institutions and labor policies in reducing polarization due to gaps in access to opportunities.Figure 4 reveals that executives in emerging economies perceive a lack of economic opportunities

237、as a major driver of polarization.Countries such as China,Indonesia,and Namibia are among the economies with over 60%of executives reporting this issue.It thus suggests a general concern in countries experiencing structural inequalities,high unemployment,or uneven development.At the same time,advanc

238、ed economies like Sweden and the Netherlands fall well below the global average(41.1%).Such results imply strong confjdence in their economic systems ability to deliver equitable access to opportunities and/or the presence of more pressing societal concerns such as identity politics or governance is

239、sues.19.2%21.5%22.2%25.0%34.5%South AfricaChinaIndonesiaTrkiyePhilippinesNamibiaNigeriaPeruMexicoArgentinaBrazilIndiaFranceGermanySwedenSpainNetherlandsEmergingAdvancedFigure 4 Economic opportunities as a driver of polarization,by emerging and advanced economies%of executives identifying the causeGl

240、obal average 41.1%0%10%20%30%40%50%60%70%40.2%41.2%42.6%47.9%56.8%58.6%60.6%64.4%66.0%66.1%68.1%74.6%33Although education and healthcare are cited as drivers of polarization less frequently overall,countries such as Chile(62.5%),Peru(60.2%),and Mexico(57.3%)show strong concerns about the unequal pro

241、vision of such services.The latter are public goods essential for social integration.Venezuela(55.9%),Namibia(54.5%),and the Philippines(49.5%)refmect similar frustrations.Trkiye(48%),Brazil(44.7%),Mongolia(43.5%),and Colombia(42.7%)suggest that public service delivery remains a signifjcant concern

242、in many 2.e.Education and healthcare middle-income economies.Conversely,Iceland(1.8%),Sweden(2.2%),and Hungary(4.1%)recorded the lowest percentages.Such performance likely underlines strong and inclusive public service systems.Taiwan(5.2%),Spain(5.4%),and Canada(10%)further present this trend.In the

243、se countries,high-quality,universally accessible systems are likely to reduce service-based grievances.Effective delivery of education and healthcare-related services offers protection against societal polarization driven by unequal access to such services.In Figure 5,Latin America stands out as the

244、 region with the highest share of executives(49.7%)identifying education and healthcare as signifjcant drivers of societal polarization.This result is in line with persistent inequalities in service access,especially in rural and marginalized communities,and supports concerns seen in country-level r

245、esults from Chile,Mexico,Peru,and Venezuela.Africa(40.9%)follows.The latter result is evidence of the regions overall infrastructure and investment in public services challenges.Although often underemphasized in overall discussions,African executives perceive education and healthcare as critical soc

246、ial fractures.In addition,Asia(28.5%)places slightly above the global average(25.3%).Respondents perceptions thus suggest that there are growing concerns around equity in public service provision in the region.Conversely,the Middle East(22.7%),Eastern Europe(17.6%),and Western Europe(15.8%)all fall

247、below the global average.For Western Europe,this is likely because of high levels of confjdence in their welfare states.In contrast,lower concern in the Middle East and Eastern Europe may suggest other drivers such as economic or political differences take precedence in perceptions of polarization.5

248、0%40%30%20%10%0%Higher the averageLower the averageFigure 5 Regional differences in education and healthcare as drivers of polarization%of executives identifying the causeGlobal average 25.3%Latin America49.7%Africa40.9%Asia28.5%Middle East22.7%Eastern Europe17.6%Western Europe15.8%34Understanding t

249、he drivers of global fragmentation through executives perceptions The fjndings of the 2025 Executive Opinion Survey suggest that business leaders are increasingly aware of the systemic nature of societal polarization.The fact that senior executives across a diverse set of countries identify common s

250、tructural defjciencies in those countries,ranging from political instability to uneven access to economic opportunity,indicates that polarization is not a marginal or isolated problem.Rather,it is a pervasive condition that affects the strategic environment in which enterprises operate.In such a con

251、text,polarization becomes both a risk and a constraint to long-term competitiveness.It creates uncertainty for investors,reduces the quality of policymaking,and undermines the legitimacy of institutions that are essential for stable economic governance.Societal polarization is shaped by several fact

252、ors that include affective divisions,economic disparities,and generational differences.It is thus a multifaceted issue that requires a comprehensive approach.The latter should foster inclusive dialogue and implement policies aimed at reducing economic and social disparities.Social cohesion is an eco

253、nomic necessity A better understanding of the drivers of polarization can enable societies to work towards restoring trust,enhancing democratic resilience,and building a more cohesive social structure.Furthermore,countries that manage to constrain polarization are likely to become more attractive en

254、vironments for investment and inclusive growth.Doing so,however,will require consistent efforts to bridge gaps in access to opportunity,address governance defjcits,and design institutions that are responsive to the concerns of all citizens.From a competitiveness perspective,reducing polarization is

255、not just a moral imperative,but also an economic necessity.Building social cohesion,enhancing voice and representation,and investing in universally accessible services will be key to creating environments that are resilient and prosperous,and that ultimately can achieve greater competitiveness.36Key

256、 trends and regional shifts in the 2025 WCR Fabian Grimm WCC Research SpecialistThe 2025 IMD World Competitiveness Yearbook reveals a dynamic reshuffming among the worlds top 10 most competitive economies,with Switzerland reclaiming the top spot,followed closely by Singapore and Hong Kong SAR.A comm

257、on thread among these leading economies is their ability to maintain strong institutional frameworks,robust infrastructure,and adaptive governance models.Switzerland,for instance,continues to dominate in Government Effjciency and Infrastructure,while Singapore and Hong Kong remain strong in Economic

258、 Performance and Business Effjciency despite facing emerging challenges in cost structures and workforce adaptability.Furthermore,economies like the UAE and Taiwan(Chinese Taipei)have made signifjcant advances,mainly because of improvements in business dynamism,investment fmows,and innovation capaci

259、ty.Across the board,the top performers exhibit a blend of stability and reform,balancing long-standing institutional strengths with targeted responses to evolving global pressures.While Denmark and Sweden maintain their positions through excellence in infrastructure and social cohesion,they also fac

260、e challenges from high operational costs and labor market constraints.Ireland and the Netherlands,though still within the top tier,show signs of strain in productivity and investment fmows.The latter are likely the results of the volatility of global capital and the importance of sustained innovatio

261、n.Meanwhile,Qatars entry into the top 10 highlights the growing competitiveness of Gulf economies,boosted by strategic investments in labor market effjciency and fjnancial infrastructure.In short,this years results highlight a global context in which agility,inclusiveness,and forward-looking policy

262、frameworks are becoming critical determinants of competitiveness.Results highlight a shifting global landscape where regional disparities persist,but new momentum is emerging in less traditionally competitive areas.While Eastern Asia and Western Europe remain institutional leaders,gains in regions l

263、ike Western Asia&Africa and South America refmect the growing importance of government effjciency as a foundation for resilience.Countries that combine strong institutions with inclusive outcomes are better positioned to manage polarization,withstand external shocks,and sustain long-term competitive

264、ness.The latter makes effective governance a defjning advantage in todays uncertain global environment.Top performers Switzerland(fjrst)Switzerland continues to demonstrate robust performance in the 2025 IMD World Competitiveness Yearbook(WCY),claiming fjrst position overall,a one-spot improvement f

265、rom its 2024 ranking.This result demonstrates the countrys resilient and stable economic and societal structures.A closer analysis shows that Switzerland continues to lead globally in Government Effjciency and Infrastructure,maintaining its fjrst position in both factors from the previous year.Yet,p

266、erformance in the Economic Performance and Business Effjciency factors is more nuanced and moderate,with Economic Performance slipping by one position to 13th and Business Effjciency also declining by one position to sixth.Despite these minor shifts,Switzerlands overall profjle remains very strong a

267、cross all dimensions of competitiveness.The basis of Switzerlands strong performance is its unparalleled strengths in Government Effjciency and Infrastructure.The countrys governance model consistently ranks highly in all fjve subfactors of the Government Effjciency factor,with the economy taking to

268、p position in both Public Finance and Institutional Framework,refmecting high levels of policy adaptability and stability.Within the Infrastructure factor,Switzerland excels across multiple dimensions,including its education system which maintained its fjrst position in 2025.While Scientifjc Infrast

269、ructure experienced a minor decline from second to third,it continues to boost the countrys attractiveness,as suggested by substantial total expenditure on R&D(3.30%of GDP).Similarly,in the Health&Environment subfactor,despite experiencing a small decline from fjrst to third,Switzerland continues to

270、 showcase strengths such as a high life expectancy at birth(83.95 years).A 37key contributor to its economic strength this year was an improvement in the International Investment subfactor,which rose from seventh to sixth.This was largely the result of improvements in indirect investment fmows abroa

271、d(%of GDP),which surged 61 places from 64th in 2024 to third in 2025,with an outfmow equivalent to 11.73%of GDP.Moreover,Switzerland demonstrated the ability to enforce effective measures for the integration of young people into the labor force,with its youth exclusion rate dropping to just 6.61%(im

272、proving considerably from 22nd to ninth in 2025).Despite its leading position,the 2025 results also highlight areas where Switzerland faces challenges or experienced a relative decline.In the Economic Performance factor for instance,while still strong in 13th,the country fell by one rank.A particula

273、r concern for the Swiss economy in this regard is the Prices subfactor,where it fell further four places from 61st to 65th.This deterioration is refmected in specifjc indicators such as gasoline prices,where Switzerland dropped 11 places to 64th(with a price of$2.06 per Liter),and the cost of living

274、 index,which saw a two-position decline to 64th(index value of 109.75).These movements underscore the high-cost environment that businesses in Switzerland operate under,which can further hinder important aspects of national competitiveness such as innovation or the ease of doing business.Consumer pr

275、ice infmation,though relatively low at 1.06%,also dropped two places to eighth.Similarly,the Employment subfactor experienced a modest drop,moving from 23rd to 25th,impacted primarily by a signifjcant 23-rank drop in employment growth which fell from 21st to 44th with a growth rate of 0.56%.Likewise

276、,the Business Effjciency factor saw a marginal decline from fjfth to sixth,indicating how the country mustnt drop the ball if it is to maintain its edge in this domain.In the International Investment subfactor,Switzerlands portfolio investment liabilities saw a substantial decrease in ranking,droppi

277、ng 52 places from 13th to 65th and shifting from an infmow of$14.48bn in 2024 to an outfmow of$6.69bn in 2025,indicating a withdrawal of foreign investment from domestic securities.Singapore(second)Singapores performance demonstrates resilience,securing second position overall among 69 economies.Alt

278、hough this marks a modest drop from its 2024 position,it continues to be a global leader in competitiveness.Interestingly,Singapore ranks in the top 10 across all four competitiveness factors.Its cross-factor strength underlines a robust and future-oriented economy.Singapore improved in Economic Per

279、formance,increasing two positions to reach the top spot.With regard to Government Effjciency,Singapore drops one position to third.Under Business Effjciency,however,the country recorded its biggest decline,from second to eighth.Performance in the Infrastructure factor weakened slightly from fourth t

280、o sixth.In Economic Performance,Singapores top rank is mainly the result of high growth in GDP and capital formation,as well as notable improvements in the export of goods and commercial services.This combined drive in the Domestic Economy and International Trade subfactors was signifjcant enough to

281、 offset the slight declines in the International Investment(from second to third)and Employment(from fjfth to sixth)subfactors.Singapores biggest challenge under Economic Performance remains in the Prices subfactor,where it experienced a deterioration from 62nd to 67th,mainly driven by high gasoline

282、 prices,expensive offjce rent,as well as a high cost of living index value.Government Effjciency continues to be a key strength of Singapores competitiveness.Despite a minor drop from second to third place,its high ranking in 2025 shows continued excellence in Public Finance,Tax Policy,Institutional

283、 Framework,Business Legislation,and Societal Framework.Such results confjrm a stable and effective governance model that leads to strong performances in government expenditure and budget surplus,balanced tax policies,a reliable and transparent bureaucracy,as well as a fair societal framework with st

284、rong social cohesion.This year,the most signifjcant shift in Singapores competitiveness landscape is in Business Effjciency,which experienced a decline from second to eighth 38Key trends and regional shifts in the 2025 WCRposition.This change results from a broad-based fall in performance across sev

285、eral crucial subfactors.Management Practices,for instance,dropped to 12th.Entrepreneurship plummeted to 56th(score:5.35 out of 10),whilst the use of big data and analytics indicator fell signifjcantly to 30th(score:5.68).Similarly,customer satisfaction also saw a decline from ninth to 22nd(score:7.3

286、3).In the Attitudes&Values subfactor,which fell from fjrst position to 11th,substantial drops were recorded in the fmexibility and adaptability(26th)and digital transformation(19th)indicators.A slight dip was also recorded in the need for economic and social reforms(fourth).Similarly,the Labor Marke

287、t subfactor also recorded a small decline,falling from fjrst to seventh.Key indicators contributing to this trend include falls in executives perceptions of apprenticeships(30th),employee training(19th),and the availability of skilled labor(14th).These shifts suggest emerging challenges in maintaini

288、ng the previously world-leading dynamism and responsiveness of Singapores business environment and workforce to global trends.In the Infrastructure factor,Singapores rank decreased from fourth to sixth.This overall decline is refmected in several of its subfactors.Small drops were observed under Sci

289、entifjc Infrastructure(from 13th to 15th)and Health&Environment(from 28th to 29th),though a more pronounced change was observed in the Education subfactor,where Singapores ranking fell from third to eighth.The latter could indicate a relative decline in a critical component of long-term competitiven

290、ess,and particular attention should be given to total public expenditure on education(which currently represents a mere 2.06%of Singapores GDP,rank 63),the relatively low number of women with degrees(33.2%,rank 42),and the countrys university education index(ranked 35th with a value of 5.87).Hong Ko

291、ng SAR(third)Hong Kong SAR advanced two positions to secure third spot in the 2025 World Competitiveness Yearbook,up from fjfth in 2024.Gains across all four factors of competitiveness underpin such an advancement.The latter highlights a broad-based approach to attracting private-sector actors.Hong

292、Kongs main strengths lie in Government Effjciency and Business Effjciency,ranking second in both factors and highlighting the importance of strong collaboration between the public and private sectors.Following a fjve-rank improvement in Economic Performance,the country also reintegrates the top 10 f

293、or that factor,achieving sixth position globally.A slightly more moderate two-position improvement in the Infrastructure factor sees Hong Kong achieve a robust seventh place.In the Economic Performance factor,Hong Kong improved fjve positions to sixth but showed mixed subfactor results.For instance,

294、the Domestic Economy subfactor dropped from 25th to 26th,infmuenced by a slowdown in real GDP growth which registered a rate of just 2.5%(falling from 12th to 28th).The Employment subfactor also weakened from 25th to 30th position,driven by a sharp decline in employment growth from 27th to 57th(-0.1

295、3%contraction in 2025).The unemployment rate remained stable at 11th(3.0%),while youth unemployment worsened slightly from 18th to 21st(9.5%).However,Hong Kong continues to be a leader in Government Effjciency,further solidifying its position by taking the second spot globally,from third in the prev

296、ious year.This performance demonstrates a path to achieving greater competitiveness that emphasizes strongly the importance of robust and reliable institutional frameworks to support businesses conducting their activities.For instance,Hong Kong receives high marks from business leaders in the legal

297、and regulatory framework and bribery and corruption indicators,scoring 8.19 and 8.21 out of 10 in the survey data,indicating a transparent and fair business environment.Hong Kongs Business Effjciency ranking also improved from seventh to second,supported by advances in the Finance subfactor from fou

298、rth position to second.This strong fjnancial sector performance was refmected across multiple indicators,including executives improved perception of stock market effectiveness which rose from 11th to second with a survey score of 7.79,and shareholder rights which increased considerably from 18th to

299、seventh with a survey score of 8.14.These improvements occurred alongside consistently high banking sector assets which maintained second position globally at 576.03%of GDP,indicating the depth of Hong Kongs fjnancial infrastructure.The Infrastructure factor also saw improvement,with Hong Kong movin

300、g up two places from ninth to seventh.This progress was supported by enhancements across several key areas including Scientifjc Infrastructure,which edged up from 23rd to 22nd,and Health&Environment which improved from 10th to ninth.The most signifjcant improvement occurred in the Education subfacto

301、r,however,where 39Hong Kong climbed two places to claim second place.This high ranking highlights the strong PISA assessment scores achieved by students in Hong Kong,who averaged nearly 40 points more than the global average,and the positive perceptions of Hong Kongs university education(survey scor

302、e of 8.05).Denmark(fourth)Denmark maintains its place among the worlds most competitive economies,ranking fourth in the 2025 IMD World Competitiveness Yearbook,a slight drop from third in 2024.Despite the small shift,the underlying performance remains strong,with Denmark excelling in Business Effjci

303、ency(fjrst)and Infrastructure(second),while Economic Performance improved signifjcantly from 22nd to 15th.The most prominent improvements in the latter factor came within the International Investment subfactor,where direct investment fmows abroad(%of GDP)jumped 24 places to ninth(3.72%),and portfoli

304、o investment assets rose from 59th to 26th($18.01bn).Direct investment fmows inward also climbed 19 places to 29th.However,Denmarks economy underperformed in the Employment subfactor(falling from 30th to 38th)with its unemployment rate rising to 6.18%(45th)and youth unemployment reaching 14.52%(44th

305、).Like most economies in this years top 10,Denmark displays a robust performance in the Government Effjciency factor.Within the Government Effjciency factor,it performs strongly in Public Finance(fjfth),Institutional Framework(third),Business Legislation(third),and Societal Framework(fjrst).Some exa

306、mples of Denmarks major strengths include the lack of media bias(fjrst),press freedom(second),its respect for the rule of law(second),and its high Democracy Index(seventh).However,tax policies in Denmark may stifme business dynamism and the innovation of its fjrms,with executives scoring a mere 4.88

307、 out of 10 for the attractiveness of the countrys real personal taxes(36th).With collected total tax revenue representing nearly 44%of GDP(66th)and personal income tax on profjts and income representing just under 25%of GDP(67th),Danish businesses operate in a tight fjscal context that may cause a c

308、rowding-out of investment.Business Effjciency(fjrst)remains Denmarks strongest competitive factor.In the latter factor,it achieves top spot in the Productivity&Effjciency subfactor and second in Management Practices.Overall productivity in purchasing power parity ranks 13th globally with$141,750 of

309、GDP per person employed,and executives have scored the Danish economy amongst the top 10 in eight of the 10 survey questions related to management practices,including adaptability to changing market conditions(score of 8.04,second),the effective use of big data and analytics(score of 7.08,second),an

310、d social responsibility(score of 7.88,third).However,high compensation levels($51.90/hour,65th)and low average working hours(1384.44 annually,68th)refmect a high-cost structure for fjrms operating in Denmark.Performance in the Infrastructure factor was particularly robust in 2025,with top-tier score

311、s in Technological Infrastructure(second),Health&Environment(fourth),and Education(Fourth).Though Denmark is one of the worlds most competitive economies,persistent high living and operational costs,evident in wage levels,working hours,gasoline prices,and a high cost of living index of 88.40,could a

312、lso negatively impact the competitiveness of fjrms.Nonetheless,Denmark continues to set a global benchmark in business and infrastructure,and with careful attention to future dynamics in employment and cost structures,it is well-positioned to maintain its status as a leader in competitiveness.United

313、 Arab Emirates(fjftl)The United Arab Emirates(UAE)has achieved a signifjcant milestone in the 2025 IMD World Competitiveness Yearbook,climbing two spots to fjfth place its highest-ever ranking.Like others at the top of the ranking,UAEs advancement refmects broad-based improvements across multiple di

314、mensions of competitiveness.It highlights the benefjts of a balanced strategy in achieving greater levels of prosperity.At the factor level,UAE performed well in Business Effjciency,which improved signifjcantly by seven ranks from 10th to third.The Economic Performance and Government Effjciency fact

315、ors remained strong,maintaining their second and fourth positions respectively,and further underscoring the UAEs economic dynamism,commitment to effective governance,and business-friendly environment.Infrastructure,historically the UAEs weakest factor,also improved,rising two spots from 25th to 23rd

316、.This results from gains in Scientifjc Infrastructure(28th),Health&Environment(33rd),and Education(22nd)subfactors.Business Effjciency saw the most notable improvement compared to last year,with the Labor Market subfactor achieving the top spot.Executives perceptions of the effectiveness of apprenti

317、ceships in the Emirates rose signifjcantly from 27th to sixth,40Key trends and regional shifts in the 2025 WCRas well as their experience of worker motivation,which climbed to 12th with a score of 6.91 out of 10.Yet,challenges remain in female workforce participation,which declined slightly from 63r

318、d to 65th,with only 23.61%of women engaged in the labor force.The Productivity&Effjciency subfactor rose from 13th to fourth,supported by increased confjdence in both large corporations(fjfth)and SMEs(16th),although Overall productivity(PPP)real growth dipped from fourth to fjfth,despite a strong gr

319、owth rate of 4.67%.Management Practices improved to 24th,bolstered by signifjcant gains in auditing and accounting practices from 48th to 24th(with a score of 7.64)and the perceived competency of corporate boards from 31st to eighth.Conversely,Entrepreneurial fear of failure worsened with 48.64%of r

320、espondents indicating that fear of failure would prevent them from starting a new business and taking entrepreneurial risks.The UAEs key strengths in 2025 lie in its dynamic business environment,robust economic fundamentals,and highly effective government policies.The countrys attractive tax structu

321、re(9%corporate tax),strong regulatory environment,and high-performing indicators,such as the ability of the economy to encourage the creation of fjrms(survey score 8.91),attract foreign highly skilled personnel(8.91),and cybersecurity(7.64),position it as a top destination for investment and innovat

322、ion.Infrastructure indicators like air transportation(9.45 out of 10)and energy infrastructure(9.27 out of 10)refmect the countrys ongoing commitment to world-class logistics and utilities.Despite these achievements,Infrastructure remains the UAEs comparatively weakest factor.While progressing,indic

323、ators such as R&D spending(1.19%of GDP,rank 34),patent grants,(323 patents granted;rank 45),and patent applications per capita(9.29 per 100,000 inhabitants)highlight the need for greater focus on innovation.Environmental sustainability also presents challenges,with high CO2 emissions intensity(394.1

324、5 tons per$1m GDP,rank 54)and a very low share of renewable energy(0.90%,rank 63).In terms of social inclusion,female labor force participation and leadership remain areas for improvement,with only 12%of board positions held by women.The rise in entrepreneurial fear of failure,down 22 places to 36th

325、,may also signal cultural or systemic barriers to risk-taking that could hinder long-term innovation and startup growth.Ultimately,UAEs strong showing in the 2025 rankings confjrms its status as one of the worlds most competitive economies.To maintain momentum,the UAE needs to intensify efforts in s

326、cientifjc research,education,environmental sustainability,and social equity,ensuring that future growth is both inclusive and innovation-driven.Taiwan(Chinese Taipei)(sixth)Taiwan(Chinese Taipei)improved its position in the 2025 rankings,advancing to sixth position from eighth in 2024.This two-rank

327、rise refmects a signifjcant boost in Economic Performance(10th)and continued strengths across Business Effjciency(fourth),Government Effjciency(eighth),and Infrastructure(10th).The most notable change occurred in Economic Performance,where Taiwan advanced 16 positions to 10th.This is the result of i

328、mprovements in the Domestic Economy subfactor,which rose from 13th to fourth,driven by indicators such as Real GDP growth per capita(up 28 places to fourth,at 4.68%).In the International Trade subfactor,Taiwan improved from 48th to 30th,supported by a rise in Goods export growth(eighth,9.72%)and in

329、Services export growth(28th,8.95%).The International Investment subfactor also advanced from 33rd to 22nd,with the portfolio investment liabilities indicator improving 30 ranks to 32nd and Direct investment abroad reaching 11th at 3.26%of GDP.However,inward direct investment declined slightly from 3

330、1st to 36th,with fmows totaling$5.7bn.Taiwan also advances in Business Effjciency from sixth to fourth place,led by its high productivity($153,623.62 per employee in PPP)and real productivity growth of 5.19%.Improvements in business sentiment were also recorded across the board with some notable upw

331、ard jumps such as the perception that apprenticeships are well implemented(up six positions to 12th)and that skilled labor is more readily available(up nine positions to 27th).On the other hand,important declines occurred in the number of working hours(down 17 positions to 25th),and the threat of br

332、ain drain on the local economy(down 10 to 45th).Government Effjciency held steady at eighth globally.Public fjnances(third)are well-managed with relatively low total general government debt as a percentage of GDP(25.73%,seventh)and a perception from executives that they do not hinder economic activi

333、ty(6.44 out of 10,13th).Tax Policy(ninth)and Institutional Framework(11th)subfactors also perform strongly,though the latter 41experienced a fjve-position decline,partly due to a signifjcant fall in exchange rate stability.In the Business Legislation subfactor(19th),Taiwan records some interesting positive movements with regard to investment incentives(up seven to 16th)and competition legislation(