IMD – Criterion of the Month – From Global to Fragmented – Diversification of the Economies

By Professor Stephane Garelli, Director, IMD World Competitiveness Center

The recession and the monetary turmoil of the past months have delayed the convergence of the world economy. More global and more unified before the crisis, the world’s economies are now increasingly desynchronized. Some nations are experiencing overheating (China, Turkey, Argentina) others recession (Greece, Portugal). Some are combating inflation (India, Russia) others deflation (Japan, Switzerland). Some are enjoying a trade surplus (Germany) while others are struggling with trade deficits (Spain, Italy), and so forth. The world economy is fragmenting and the fragments are moving in different directions at varying speeds.

To face up to this challenge, businesses need to develop the ability to manage multiple business models in parallel. No single strategy fits all or can cope with the ever increasing diversity of local economic situations. Flexibility and diversity are the names of the game. Competitive countries will thrive by diversifying their economy.

The criterion of the month shows which nations have succeeded in spreading risk in such a fragmented world competitiveness landscape.

Check:

http://www.imd.org/uupload/dm/files/WCC/Criterion_Jan12.pdf?MRK_CMPG_SOURCE=wcc_1512001&utm_source=DM&utm_medium=em&utm_campaign=WCC_12_DME_1512001

Povl Tiedemann

January 2012

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