Economies across the world are "ill-prepared" for the next wave of "automation and robotisation" and remain at risk of further shocks, according to the World Economic Forum's latest global competitiveness report.
The Switzerland-based WEF's 2017 Global Competitiveness Index, published today, assesses countries' productivity and prosperity based on various factors, including its institutions, infrastructure, education, innovation and labour market efficiency, among others. It showed a sharp divide between major global economies.
"Ten years on from the global financial crisis, the prospects for a sustained economic recovery remain at risk due to a widespread failure on the part of leaders and policy-makers to put in place reforms necessary to underpin competitiveness and bring about much-needed increases in productivity," WEF stated of its findings.
In 2017, the report found that Switzerland retained the top spot as the most competitive economy, closely followed by the US and Singapore. Also in the top 10 were the Netherlands in fourth place, followed by Germany, Hong Kong, Sweden, the UK (which had fallen from sixth to eighth place), Japan and Finland.
Major BRICS economies lagged far behind the leaders, with China standing at number 27 in the forum's ninth year of competitiveness rankings, Russia at 38, India at 40, South Africa at 61 and Brazil at 80.
There was also much divergence between the high-ranking northern European economies and southern European ones, including Spain (34), Italy (43) and Greece (87).
With the usual suspects populating the rankings again this year, Margareta Drzeniek-Hanouz, head of economic progress at the WEF, told CNBC on Wednesday that there had not been much effort at structural reforms that would improve competitiveness.
"Global growth has been mainly fuelled by monetary policy and low interest rates over the last few years so we do not see much progress on productivity, so that is reflected in the ranking. We should be seeing more (productivity) in order to keep growth going forward," she said.
The organisation said that its 2017 report highlighted three key areas of concern, including the robustness of the financial system, a lack of flexibility in labour markets and an imbalance between investments in technology and efforts to promote their adoption in the wider economy.
Heralding what the organisation has called the Fourth Industrial Revolution – which is characterised by a range of new technologies that are fusing the physical, digital and biological worlds - WEF urged governments to adopt more flexible labour policies as an era of automation and robotisation approaches.
"Another key finding is that competitiveness is enhanced, not weakened, by combining degrees of flexibility within the labour force with adequate protection of workers' rights. With vast numbers of jobs set to be disrupted as a result of automation and robotisation, creating conditions that can withstand economic shock and support workers through transition periods will be vital," it said.
Commenting on the latest WEF report, Klaus Schwab, the organisation's founder and executive chairman, said that "global competitiveness will be more and more defined by the innovative capacity of a country".
"Talents will become increasingly more important than capital and therefore the world is moving from the age of capitalism into the age of talentism. Countries preparing for the Fourth Industrial Revolution and simultaneously strengthening their political, economic and social systems will be the winners in the competitive race of the future," Schwab said.
WEF's Global Competitive Index Top 10 2017-2018:
2) United States
6) Hong Kong
8) United Kingdom