The 30th edition of the IMD World Competitiveness Ranking has revealed that Luxembourg has come in at 11th place in 2018, a decline of three places since 2017. However, don’t be misled, coming in 11th in a survey of 63 countries, including some of the world’s strongest and dynamic economies, is an impressive feat for one of the world’s smallest economies.

The index analyses and ranks the capacity of countries to create and maintain an environment which sustains the competitiveness of enterprises. It therefore assumes that wealth is created primarily at the enterprise level, whether private or state-owned. The analysis is carried out via a study of 260 indicators including hard data, as well as a survey of business owners.

“Hard data does not change much from one year to the next, but survey data can. It reveals the perception of business owners to their environment and conditions at the time and so can change and this is likely to have had an impact on Luxembourg’s ranking,” explained Nivet.

Not only that, but he also explained that Luxembourg’s ranking is impacted by the dynamism of other countries. “Look at the countries ahead of Luxembourg in the top 5--the US, Hong Kong, Singapore the Netherlands and Switzerland. These are large economies which have invested heavily in education and innovation. For a small economy like Luxembourg to have been ranked in 11th place behind these countries is actually impressive.”

The 2018 survey lists Luxembourg’s key challenges in terms of competitiveness as:

• Moving towards a sustainable growth model, focused on productivity and following the 3rd Industrial Revolution Strategy;
• Raise awareness, prepare and qualify the workforce for the digital economy, support digital innovation in SMEs;
• Improve state governance efficiency and further the entrepreneurial dynamic through administrative simplification;
• Create a friendly environment for start-ups and boost entrepreneurship;
• Significantly increase housing supply to meet the rising demand.

“Luxembourg has a strategy and is doing all of these things,” said Nivet, “but it is possible that the benefits of the long-term investment they require are not yet being felt by the population. Thus, the perception is negative, housing shortage, traffic congestion, pressure on salaries etc.”

It is Nivet’s view that Luxembourg remains a highly competitive country. If Luxembourg has declined slightly, it is an indication that other countries have moved up according to the survey’s criteria, not necessarily that Luxembourg has become less competitive.

As for Luxembourg’s neighbouring countries, Germany came in 15th and Belgium 26th. France improved slightly to achieve 28th place.