The World Economic Forum (the organisers of Davos) has issued its latest Global Competitiveness Report. This is a fascinating insight into the health of economies beyond simply GDP, and the largest study of its kind. You can read the full report here.
Most interesting are the insights into productivity and prosperity, and how they differ between nations.
The challenge facing most policymakers is navigating the short term turmoil while trying to establish the fundamentals that underpin economic growth and development for the longer term.
While policymakers around the world remain concerned about high unemployment and the social conditions in their countries, the key call to action by the WEF is for countries to focus on raising productivity.
The report adds…
“Sustained structural reforms aimed at enhancing competitiveness will be necessary for countries to stabilize economic growth and ensure the rising prosperity of their populations going into the future. Competitive economies drive productivity enhancements that support high incomes by ensuring that the mechanisms enabling solid economic performance are in place.”
The WEF defines competitiveness as the set of institutions, policies, and factors that determine the level of productivity of a country.
The WEF concludes by explaining the 12-pillars of competitiveness – the structural economic foundations for growth. You can read them beginning on page 2 of the report. The first of the 12-pillars is the legal and administrative framework which underpins the financial system.
My eye was drawn immediately to this quote:
“The recent global financial crisis, along with numerous corporate scandals, have highlighted the relevance of accounting and reporting standards and transparency for preventing fraud and mismanagement, ensuring good governance, and maintaining investor and consumer confidence. An economy is well served by businesses that are run honestly, where managers abide by strong ethical practices in their dealings with the government, other firms, and the public at large. Private-sector transparency is indispensable to business, and can be brought about through the use of standards as well as auditing and accounting practices that ensure access to information in a timely manner.”
Clearly we have a tremendous responsibility as an industry and we need to continually adapt and evolve our practices to meet the demands of a complex economic environment.
RSM’s work to support the EU commission in its proposed reform of the audit market is just this. We are at the cutting edge of creating a fairer, more balanced and more competitive industry for the benefit of companies, investors and economies alike.