Germany has dropped out of the top three in the World Economic Forum’s Global Competitiveness report. The federal republic has fallen four places and is now seventh overall, with Hong Kong replacing it as number three in the world.

The Global Competitiveness Index

The Global Competitiveness Index was developed by Spanish economists Xavier Sala i Martin and Elsa V. Artadi. It has been used since 2004 to rank countries in the Global Competitiveness Report, published by the WEF. The report ranks 141 countries by their ability to provide a high level of prosperity to their citizens.

In order to rank countries for the report, the Global Competitiveness Index uses 103 indicators that are organised into 12 “pillars". These pillars are: institutions, infrastructure, macroeconomic stability, health and education, higher education and training, goods markets, labour markets, financial markets, ICT (information and communication technology) adoption, market size, business dynamism and innovation.

Germany’s performance according to the GCI

Germany improved on 18 indicators this year. It ranked first for innovation, which concerns the number of registered patents or scientific publications, and ranked relatively well in infrastructure (8th) and macroeconomic stability (an assessment of inflation and debt, for which it received a perfect score of 100). Germany (ranked ninth in this category), along with USA (first), were the only two G20 countries to rank in the top 10 for their ongoing adaptation to digital business models.

However, Germany biggest weakness is ICT adoption (36th). With an overall ranking of 72 for fibre-optic internet connections and 58 for mobile broadband connections, when it comes to information technology use, the federal republic has fallen behind Russia, China, all the Baltic and Nordic countries, and several Gulf countries as well.

Germany received lower scores in 53 different areas this year. In addition to ICT adoption, it underperformed in security (under the pillar of institutions) and labour markets. Germany placed 74th place for organised crime and placed particularly low in redundancy costs (100th) and flexibility of wage determination (102nd).

Germany’s performance compared to Europe

In falling down to seventh place, Germany has fallen behind the Netherlands and Switzerland, who are currently ranked fourth and fifth respectively. Germany is the only major EU country to slip in the rankings, as Spain moved up three places to 23rd, France moved to 15th place from 17th last year, and Italy moved up one place to 30th.

The top 10 most competitive economies in 2019

This year the top 10 most competitive economies are:

• 1. Singapore
• 2. USA
• 3. Hong Kong SAR
• 4. Netherlands
• 5. Switzerland
• 6. Japan
• 7. Germany
• 8. Sweden
• 9. UK
• 10. Denmark

For more information on the Global Competitiveness Index, the pillars, the indicators and how they are scored, you can take a look at the full WEF report.