The United States was named the world's most competitive economy by the World Economic Forum (WEF) on Wednesday.
In its Global Competitiveness Index, WEF — known for its annual economic forum in Davos, Switzerland — ranked the U.S. as the most competitive of 140 economies, the first time the nation has reached the top spot in a decade.
Singapore and Germany ranked second and third respectively, with researchers finding the European economy was now less competitive than those in East Asia and the Pacific.
The report mapped the competitiveness of global economies using 98 indicators including workforce diversity, press freedom, labor rights, and disruptive businesses.
The U.S. was given a competitiveness score of 85.6 out of 100, with its strengths including business dynamism, its labor market, and the financial system. However, the report noted that the U.S. economy was being held back by a weakening social fabric, worsening security, lack of IT adoption, and corruption. It also lagged behind most advanced economies in terms of health, with the country's life expectancy three years below the average of advanced economies.
Singapore, which closely followed the U.S., remained competitive thanks to policies that promoted openness, a key driver for its economic success. Meanwhile Germany, ranked third, scored highly on its macroeconomic stability, but like the U.S., was held back by slow IT adoption.
The U.K. was named the eighth most competitive economy, with WEF praising the quality of its research institutions and workforce diversity but giving the country a lower score for life expectancy and skills.
China, ranked 28th, was the most competitive of the emerging markets, followed by Russia in 43rd place. No other emerging markets were ranked among the 50 most competitive economies.
WEF warned that the global economy was not ready for the Fourth Industrial Revolution — the rise of digital technologies — with 103 of the 140 economies on the index scoring lower than 50 percent for innovation capability.
"Embracing the Fourth Industrial Revolution has become a defining factor for competitiveness," said Klaus Schwab, WEF's founder and executive chairman, in the report.
"I foresee a new global divide between countries who understand innovative transformations and those that don't. Only those economies that recognize the importance of the Fourth Industrial Revolution will be able to expand opportunities for their people."
While it acknowledged the importance of technological innovation, WEF also urged governments to facilitate growth with "openness" policies such as low-tariff barriers and ease of hiring foreign labor. It also made a case for redistributive policies, such as investing in human capital through training schemes, and taxation aimed at tackling inequality.
Saadia Zahidi, the head of WEF's Center for the New Economy and Society, said all countries could become more prosperous if they pursued innovation that didn't come at the expense of "old" developmental issues.
"The Fourth Industrial Revolution can level the playing field for all economies," she said in the report. "But technology is not a silver bullet on its own. Countries must invest in people and institutions to deliver on the promise of technology."