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World Economic Forum report points out pitfalls on the road to economic recovery from the Covid crisis

World Economic Forum report points out pitfalls on the road to economic recovery from the Covid crisis
(Image: Adobe Stock)

The World Economic Forum has released a special edition of its renowned Global Competitiveness Report to measure how prepared countries are to rebound from the Covid-induced economic slowdown. The report shows SA is generally ill-prepared – but on some measures the country, surprisingly, outperforms.

While it’s axiomatic that the coronavirus pandemic has devastated the global economy, the question remains how well countries are prepared to bounce back. To try and determine an answer to this enormous and difficult question, the World Economic Forum (WEF) has adapted its annual competitiveness report to focus on measures that governments have and should be taking to rebound.

It also measured how well 37 countries have coped with the economic aspects of the crisis, comparing data according to 98 indicators that were then organised into 12 “pillars”. It stands to reason that some countries are doing better than others, especially those with strong safety nets and robust healthcare systems. 

One additional factor determined how well countries dealt with the economic aspects of the crisis, and that was the extent to which they had previously embraced the digital economy.

These advantages naturally point to areas and topics that countries should be focusing on to effect a profound economic rebound.

“The combined health and economic shocks of 2020 have impacted the livelihoods of millions of households, disrupted business activities, and exposed the fault lines in today’s social protection and healthcare systems,” said Klaus Schwab, founder and executive chairman of the WEF.

“The crisis has also further accelerated the effects of the Fourth Industrial Revolution on trade, skills, digitisation, competition and employment, and highlighted the disconnect between our economic systems and societal resilience. In this moment, it is crucial to not only reflect on how best to return to growth, but also, how to build back better economies that improve outcomes for people and the planet,” Schwab said in the introduction to the report, “How Countries are Performing on the Road to Recovery”.

So what, when compared to other countries in the world, has SA got right and what has it got wrong?

The report has some revealing comparative data. One of the measures is Trust in Government, with high-trust countries unsurprisingly likely to perform better than countries where trust is low.

SA’s performance on this measure is unusual, since trust in government ranks about average even though SA has slid on corruption measures, and is markedly less transparent when it comes to securing public contracts.

The disconnect is startling. Of the 37 countries measured, SA is the fourth most corrupt, performing better only than Russia, Mexico, Brazil and Turkey. Yet its Trust in Government measure is better than average.

As is well known in SA, human capital development – a grand title for what is essentially education prowess – has gone backwards, and in this SA is in surprising company, joining the UK, the US and, would you believe it, Germany. But the extent of SA’s decline is enormous, sliding propitiously (almost as much as the UK!). The gap between the improvers and the decliners is now yawning, with China, South Korea, Turkey and Saudi Arabia all doing well on this measure.

“Talent shortages have become more pronounced, underpinned by outdated education systems,” the report concludes ominously.

Economic Transformation is an absolute article of faith of the SA government and has been for almost 30 years. But, by international comparison, SA’s performance on this measure is massively uneven. 

SA ranks first, yes first, on the Shift to More Progressive Taxation measure. This measure asks to what extent countries are rethinking how corporations, wealth and labour are taxed, nationally and in an international cooperative framework.

But the country comes stone last on another aspect of this measure: “rethinking labour laws and social protection for the new economy and the new needs of the workforce”.

Overall, SA ranks near the bottom on Economic Transformation, which is an extraordinary indictment, given how often economic transformation is claimed to be the core of government policy. Small consolation is that SA is actually performing better than Sweden, Switzerland, the UK and the US – a conclusion which seems at odds with general preconceptions.

“During this time of profound uncertainty, the health crisis and economic downturn have forced a fundamental rethink of growth and its relationship to outcomes for people and the planet,” said Saadia Zahidi, managing director of the WEF.

“Policy-makers have a remarkable opportunity to seize this moment and shape new economic systems that are highly productive while growing shared prosperity and environmental sustainability,” she said.

The full report is available here. DM/BM

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