MONTREAL ― Canada has beaten the U.S. for the first time ever in a ranking of the world’s most competitive economies, in part because of U.S. President Donald Trump’s damaging trade war with China.
Canada rose to 8th place from 13th last year in Swiss-based business school IMD’s annual ranking. The U.S. fell to 10th place, from 3rd place last year.
That’s the country’s worst performance in a ranking it dominated for decades, and marks the first time Canada scored higher in the survey that has been running since 1989.
The ranking largely reflects data from 2019, though the survey of business leaders’ opinions used as part of it was carried out in early 2020.
“Trade wars have damaged both China and the U.S. economies, reversing their positive growth trajectories,” IMD said in a report, noting that China has fallen to 20th place, from 14th last year.
Arturo Bris, a finance professor and head of IMD’s Competitiveness Centre, noted that virtually all of the countries in the top 10 are now relatively small economies.
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“The benefit of small economies in the current crisis comes from their ability to fight a pandemic and from their economic competitiveness. In part these may be fed by the fact it is easy to find social consensus,” Bris said in the report.
“This marks a new world in which de-globalization (and) the importance of national government has increased,” he told a virtual roundtable discussion.
“As a result, the global powers that have been competing for some time ... now they lose ground in favour of small economies and national governments.”
The success of many of these smaller countries ― particularly northern European countries, Canada, Australia and New Zealand ― is due to “their pretty much open welfare state,” said Alexander Stubb, director of the School of Transnational Governance at European University Institute.
“They are very transparent in the way they deal with things, they are globally oriented and they are competitive in many ways,” Stubb, a former prime minister of Finland, told the roundtable.
In the wake of the pandemic, there will be some instances of “going native,” Stubb suggested.
“People are going to be a little more careful about where masks are going to be produced,” he said.
The panel largely agreed that the shift away from globalization is temporary, though when the global economy comes back in full force, it will likely look different.
Eiman Al Mutairi, assistant minister of commerce in the government of Saudi Arabia, said the pandemic has prompted a discussion about larger flaws that may exist in societies and economies.
“This crisis made us ask what would happen after the crisis: do we have the whole ecosystem? Do we have the necessary logistics? The good that has come from this is that it has served as a form of stress test,” she said.