Results for Selected Economies
Because many of the aspects relating to sustainability require many years for significant change to occur, we observe only small movements in the performance of economies from one year to the next. Nonetheless, constant monitoring and benchmarking of selected indicators helps to identify possible areas of risk and the direction of progress on particular dimensions in each country. The following description of results (presented in the order of this year’s GCI ranking) provides an overall picture of the performance and highlights the main strengths and areas of challenge for selected economies.
Switzerland confirms its strong sustainability performance. Its 1st place in the GCI rankings is reinforced when that Index is adjusted by social and environmental sustainability indicators. Youth unemployment is slightly increasing but remains at a fairly low level (8.4 percent), while social protection and mobility remain in line with past rankings, painting a positive picture of the Swiss social system. In terms of environmental sustainability, Switzerland, by achieving relatively positive results across all the measured dimensions, again demonstrates that trade-offs between being sustainable and being competitive are not necessary. For example, the country’s strong results on environmental stewardship are achieved by enforcing effective environmental regulations, providing water treatment, and protecting its biodiversity. However, improvements could be made in some areas: air pollutant emissions are still above an optimal level, and the country has also seen a slight decrease in forest cover since the year 2000. Therefore, although Switzerland’s leadership manages its social and environmental capital rather well, stakeholders should not be complacent and should continue to monitor and improve the management of Swiss resources.
The sustainability performance of the United States is mixed. When adjusted by the social sustainability dimension, US competitiveness improves slightly but less than that of other advanced economies because of its still-high levels of income inequality and youth unemployment (15 percent on a decreasing trend). In terms of environmental sustainability, the adjusted score reveals a somewhat lower performance, spanning air pollutant emission, depleting fish stocks, and a low commitment to joining international treaties. Recent reports of a greater policy focus on social and environmental problems—as exemplified by the adoption of the Clean Water Act and Clean Power Act—puts the country in the right direction for attaining more sustainable path.
Nordic countries also continue to perform well overall and display specific areas of improvement. Finland, despite an inclusive social system and a track record of managing resources responsibly, has to address a rather high level of youth unemployment (approximately 19 percent), depleting fish stocks, diminishing forest cover, and limited protected areas.
Germany is similar in many respects to the Nordic economies. On the social sustainability pillar, it is characterized by relatively low youth unemployment, widespread access to healthcare, and the presence of a social safety net. However, emerging social difficulties, such as rising poverty in Germany, are reported by local studies, demonstrating that such difficulties have started to concern a significant portion of the population even in some of the most prosperous countries in the world. 42 Like social sustainability, environmental sustainability is also assessed relatively positively. Stringent and well-enforced regulations and the existence of a large area of protected land indicate Germany’s particular attention to environmental issues. However, CO2 intensity is still relatively high and does not seem to be on a decreasing trend, fish stocks are overexploited, and particulate matter emission is beyond the optimal level.
Japan delivers a relatively positive performance on the social sustainability component as a result of its low youth unemployment, its small informal economy, and its resilient social safety net. The country attains an overall positive performance on the environmental dimension as well, but with a number of areas still in need of improvement. Japan is tightening some of its environmental policies, yet it continues to be penalized by a high level of CO2 emissions and shows some signs of water stress.
Sweden has the highest youth unemployment rate within the Nordic group, which results in its relatively weaker position within the Nordics on the social sustainability pillar. Nonetheless, Sweden remains a country with notable social protection and is one of the least unequal societies in the world. In terms of environmental sustainability, it adopts effective regulations and manages to control air pollution, but it is depleting its fish stocks and its forests have diminished over the last decade, two areas that may require policy attention.
Norway attains the strongest social sustainability performance of all the countries in the sample this year, balancing low inequality and social protection with high mobility and low level of unemployment. On the environment side, similar to other economies in the region, Norway is making efforts to reduce its footprint on its natural capital but should manage fish stocks and forests in a more sustainable way because both are declining.
In the United Arab Emirates, low youth unemployment and wide access to basic necessities positively influence social sustainability, which therefore does not compromise its general competitiveness level. In terms of environmental sustainability, severe water stress (which is partly a consequence of the country’s particular geographical positioning), pressure on fish stocks, and a high concentration of particulate matter and CO2 emissions impact its sustainability-adjusted competitiveness. In addition, the country is signatory to fewer international environmental treaties than most other economies.
China’s competitiveness continues to suffer from limitations resulting from low sustainability, especially as it pertains to the environment. In terms of social sustainability, China is slowly expanding access to drinking water and sanitation for the entire population, but inequality is still high and the welfare system is available only to some full-time urban workers. The country does not report data related to youth unemployment or vulnerable employment; these indicators cannot therefore be assessed. On the environmental sustainability side, China encounters some severe difficulties especially concerning water and air pollution. CO2 emissions have stopped increasing but they remain high, while the concentration of PM2.5 particles signals potential health concerns related to air pollution, especially in urban areas. The country’s management of water resources is relatively unsustainable: increasing water stress and the heavy pollution of streams results in severely damaged water resources, and only a low proportion of the water withdrawn is treated before it is returned to the ecosystem. The introduction of pollution taxes has not yet delivered a significant reduction of emissions, and, despite intentions to improve the situation, policy has yet to be implemented in an effective way.
Indonesia’s competitiveness performance declines when adjusted by sustainability. In terms of social sustainability, the most critical area remains the significant share of the population in vulnerable employment, despite a slight improvement. Additionally, access to healthcare and sanitation remains low (40 percent of the population still does not have regular access to sanitation facilities). In terms of environmental sustainability, deforestation, fish stock depletion, and lack of water management continue to damage Indonesia’s highly diverse ecosystem. Environmental regulations and their enforcement remain insufficient, putting the invaluable natural capital of the country at risk.
As it faces difficulties related to sustainability, especially in the environmental area, the Russian Federation attains an intermediate performance on both pillars again this year. In terms of social sustainability, the Russian Federation is still characterized by a relatively weak social safety net, high and increasing inequality, and limited social mobility. All these indicators have remained constant since the last assessment. In terms of environmental sustainability, regulations are still only weakly enforced and only 21 percent of the water withdrawn is treated. This low treatment rate could be a source of water stress in the future, although today Russia is endowed with one of the largest water reserves in the world. Emissions, especially CO2 intensity, are also higher than international standards, and fish stocks are depleting. The country should better manage its natural capital to ensure prosperity in the long run.
South Africa’s main social problems remain its extremely high income inequality and youth unemployment, but inadequate access to healthcare and a poor social safety net are also contributing to a below par result on the social sustainability dimension. In addition, the country has not yet achieved universal access to sanitation. From an environmental point of view, South Africa is not protecting its rich biodiversity enough: it protects only a few areas, has little wastewater treatment, and is depleting its fish stocks. In addition, CO2 emissions are at the level of more industrialized economies. On a positive note, it seems that the country has made progress in forest stewardship.
Brazil’s results on sustainable competitiveness remain substantially in line with its GCI score. In terms of social sustainability, inequality is still very high and, despite some positive developments, the country is still characterized by its population’s limited access to the healthcare system and the social safety net. However, these factors are partially compensated by its low youth unemployment and almost universal access to improved drinking water. From the environmental point of view, deforestation—despite efforts from the government such as the creation of the Real Time Deforestation Detection System—and a lack of water treatment remain significant issues. On a positive note, despite the negative effect of deforestation on greenhouse gas emissions, the overall carbon intensity level and particulate matter concentration are lower than in countries at a similar stage of development. In addition, an abundance of water puts little stress on water availability. But the adoption of tighter environmental regulations is needed to make sure that Brazil’s rich natural capital is managed responsibly and will remain an asset for future generations.
Mexico’s competitiveness is also not entirely sustainable, especially from the environmental point of view, where there are several penalizing factors: the enforcement of its regulations is rather lax, and perhaps partially explains the country’s low performance on most of the dimensions: management of water resources, fish stocks, forestry, and carbon intensity. Only 37 percent of the wastewater is treated, adding pressure to the country’s water supply. Looking at Mexico’s social sustainability performance, its low youth unemployment and widespread access to water and sanitation offset its relatively high level of inequality, its widespread informal economy, and the limited coverage of its social safety net.
Colombia’s competitiveness is reduced again this year once sustainability is taken into account. Although overall poverty has been declining for decades, the country’s social sustainability is still weak: access to healthcare services is limited and Colombia does not yet have an integrated social safety net, which exposes a large fraction of the population in vulnerable employment to poverty risk. The existence of some social programs and the Family Welfare Institute has not so far been able to provide a structure that sufficiently supports disadvantaged individuals. The difficult economic situation of many households hinders social mobility, which reinforces persistent income inequality. In terms of environmental sustainability, Colombia should better defend its vast and biologically diverse natural capital endowment. The country has managed to institute several protected areas and can count on remarkable water reserves. However, its enforcement of environmental regulations remains weak and its treatment of the water used is limited. Deforestation also continues to represent a problematic issue. Forest is cleared mainly because of illegal logging, agriculture, mining operations, and the construction of infrastructure and housing. Balancing economic development and sustainability is particularly challenging for a country whose surface area is 50 percent covered by forests, yet preserving its natural heritage and managing its forests sustainably would bring benefits for Colombia’s competitiveness in the long run.
Vietnam’s GCI performance is again weakened once sustainability measures are considered. In terms of social sustainability, the country’s main challenges are the insufficient coverage of its social safety nets in the context of large segments of its population living with vulnerable employment and low social mobility. In the environmental domain, difficulties are even more worrisome in some areas. Regulations are still assessed as lax and not well enforced, and the country’s level of commitment to international treaties remains low. Vietnam’s recent industrialization combined with its limited environmental norms is having a strong negative impact on the environment, including air and water pollution, where only a negligible fraction of the water used is treated.
India’s competitiveness is also reduced when sustainability is taken into account. Social sustainability is hindered mainly by the population’s very uneven access to sanitation (still only 36 percent of Indians have access to these basic services) and high rates of vulnerable employment. To a lesser extent, its large informal economy and its lack of a universal social safety net show that India remains largely a poor country that is developing with large disparities within its society. India’s environmental performance is also below par because the country’s natural assets are depleting, despite some efforts in tightening environmental regulations since the adoption of the Air (Prevention and Control of Pollution) Act 1981.43 Air quality has slightly improved this year, but concentrations of particulate matter and carbon intensity are still very high: this is the case especially in the main urban centers, which are ranked among the 50 most polluted cities worldwide. In addition, the limited treatment of wastewater is increasing pressure on India’s water tables, and limited protected areas are wearing down the assessment of the quality of the natural environment. Although on some issues the authorities are working to improve the situation, little action has been taken on specific but significant areas of environmental management. For example, in 2011, the Indian Supreme Court refused to ban asbestos, which is internationally recognized as toxic and banned in almost all developed countries. Also, enforcement of its regulations is often ineffective, especially when it comes to improving water quality—a lack that is still having an effect on child mortality.44
Kenya’s sustainable competitiveness is weakened primarily by the social dimension of sustainability, while environmental sustainability is not presently affecting the country’s overall sustainability-adjusted score. Kenya has made only slight progress in expanding access to improved drinking water, healthcare services, and sanitation facilities. Youth unemployment has increased and inequality remains relatively high. In terms of environmental sustainability, however, Kenya has been sensitive to the loss of biodiversity that accompanies its socioeconomic development and the government has adopted measures to protect the environment with a relatively strict regulatory framework, a strong commitment to international treaties, the creation of protected land areas, and the adoption of a national environment policy. Yet protection of forests and habitats remains an issue, with logging related to timber production and agriculture reducing the stock of forests faster than their natural regenerative capacity. Furthermore, water treatment practices are rare and fish stocks are depleting.
Although Ghana is one of the most developed countries in the region, the social sustainability pillar assessment unveils persistent gaps in access to improved sanitation, and large portions of the population work in vulnerable jobs or in the informal economy and do not have access to social security. In terms of environmental sustainability, Ghana’s performance is somewhat more balanced but some concerns remain. Deforestation is continuing to deplete the country’s natural resources at a rapid rate: on average, almost 5 percent of the forest cover is lost each year. In addition to logging, commercial agriculture is clearing land by burning and cutting wooded areas, damaging the country’s forest cover. Water withdrawn is almost never treated, resulting in further polluting streams and aquifers. In addition, environmental regulations are not very stringent and tend to be somewhat poorly enforced. More efficient resource management would enable Ghana to preserve its natural wealth and improve the living conditions of its citizens.
Senegal’s main areas of vulnerability are related to social sustainability. Although slightly improving this year, access to improved sanitation is limited (this is available to only 52 percent of the population). Access to improved drinking water is more widely available, albeit still insufficient (74 percent). In addition, large portions of the population do not have access to healthcare services and are not protected by a social safety net. The social structure of Senegal remains somewhat less unequal than other African economies, however. Its income Gini index is 40.3—better than that of Ghana or Kenya. The environmental sustainability pillar, despite an overall performance that is in line with the GCI, also presents some areas of concern. Overexploited fish stocks, along with air and water pollution, are again the priorities that need to be addressed to ensure sustainability. Because of its level of development, it is hardly surprising that infrastructure for water treatment is also lacking. The creation of several protected land areas and commitments to most of the international environment treaties are important steps that the country has recently taken toward protecting the environment. By expanding the protection of its resources, Senegal could achieve a more sustainable development path.
Africa’s most populated country, Nigeria, is encountering sustainability challenges especially in the social domain. Access to basic services remains very low for millions of Nigerians: only 28 percent of the population has access to basic hygiene, and less than 65 percent enjoys improved water. Similarly, safety nets and healthcare services are available only to a minority of people. These issues, typical of a developing economy, may jeopardize the future competitiveness of the country as they limit the country’s human capital. On the environmental side, Nigeria’s low stage of development results in a low level of carbon intensity, and the country is currently not putting excessive stress on its water resources. However, water treatment is virtually nonexistent and could be a source of concern for future water availability that could have significant social consequences, as over 35 percent of the population uses un-improved water. Environmental regulations are also limited and not appropriately enforced, which could result in further environmental damages affecting the population.