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Three keys to competitiveness amid economic uncertainty

Learn the agility, skills, and cybersecurity steps public sector leaders can take to navigate and succeed in an ever more complex world.

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The two decades from 1997 to 2017 were characterized by what can only be described as massive change in economics, politics, technology and society. Despite this, all but two of the 12 largest economies identified by the United Nations in 1997 remained in the top 12 in 2017.¹ But this superficial stability belies substantial change in the relative size and strength of the countries. China jumped from the seventh to the second largest economy in the two decades to 2017. India jumped from fifteenth to seventh.²

In light of this, the Uncertainty Index conducted by the Economic Policy Uncertainty group suggests that global economic uncertainty remains extremely high.³ Based on more than 20 years of data, the group concludes that economic and policy uncertainty is counter-cyclical.⁴ That is, high uncertainty is correlated with negative growth.

With global uncertainty threatening economic growth, the world’s largest economies must find new ways to stay competitive.

In this report, executives from the 12 largest economies share their views on economic challenges, risks, opportunities, and competitiveness. The report describes the three key focus areas that can enable nations and regions to mitigate risk and foster economic vitality.

We find that regulatory concerns are a top challenge. As many as 69 percent of US executives identify regulation as a challenge for their organization. Cyber threats are also a concern, with 54 percent of saying they are among their biggest strategic risk for their nation’s economy in the next five years. We also examine the role automation and artificial intelligence (AI) technologies will impact the national labor markets.

The report also lists, in order of importance, factors—like labor and real estate costs and effective corporate tax rates—that executives use when making market expansion decisions.

¹ “National Accounts: Analysis of Main Aggregates (AMA).” United Nations Statistics Division, Economic Statistics Branch. December 2017. https://unstats.un.org/unsd/snaama/dnlList.asp; Spain and Mexico were ranked 10th and 12th largest economies by the United Nations in 1997 and now rank 14th and 15th respectively.

² Glynn, James. “Australia’s Record-Beating Economic Growth Continues.” September 4, 2018. The Wall Street Journal. https://www.wsj.com/articles/australias-economy-expands-strongly-in-2q-1536115061

³ Ahir, Hites, Nicholas Bloom, and Davide Furceri. “The World Uncertainty Index.” Economic Policy Uncertainty. October 29, 2018. http://www.policyuncertainty.com/media/WUI_mimeo_10_29.pdf

⁴ Ibid

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Meet the authors:

Kazuaki Ikeda

Connect with author:

, Vice President and Leader, IBM Strategy and Analytics, Japan;
Dave Zaharchuk, Research Director, IBM Institute for Business Value; Anthony Marshall, Senior Research Director, IBM Institute for Business Value

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