Ask a business leader what their company’s business model is, and they should have an answer. What differentiates it? Where does its advantage come from? How do its capabilities work together to create value? And does that model still work when the environment around it changes?
Countries should be able to answer many of the same questions, particularly as geopolitical tensions rise, trade relationships become less predictable, and technological change shifts the sources of economic advantage. But many of the assumptions on which countries built their prosperity can no longer be taken for granted.
The 2026 IMD World Competitiveness Ranking points to the growing importance of institutional credibility. Predictable rules, enforceable commitments, and trusted institutions give businesses greater confidence to invest when the external environment becomes less certain. However, institutions are only part of the picture. Talent, technology, capital, and infrastructure matter too, and their value depends in large part on how they fit together.
A panel discussion at the IMD Competitiveness Summit Ambassador Lunch in Bern brought together three perspectives on what drives national competitiveness and how countries can sustain it as conditions change.
Jean-Paul Lemieux, Ambassador of Canada to Switzerland and Liechtenstein, Taekyoon Kim, Ambassador of the Republic of Korea to the Swiss Confederation, and Ronald Indergand, Head of the Economic Policy Directorate at SECO, discussed the different strengths underpinning their countries’ competitiveness – and some of the pressures those models now face.
South Korea’s model has been built around particularly close connections between technological development, industrial policy, education, and research. Kim described the country’s strengths as including “innovation and technology, and industrial policies,” alongside “the high quality of human resources” developed through its education system, universities, and government-supported research institutes.
He pointed to partnerships between Samsung and SK Hynix and selected universities, where specialist semiconductor departments help develop talent that can then be recruited into the industry. “It’s a very deep, deep ecosystem across different stakeholders,” Kim said. “For example, government and the universities and the think tank and the research institute and (the) private sector.”
The interaction between those institutions is significant. Rather than treating universities, research, industrial policy, and companies as separate sources of competitiveness, South Korea has been able to concentrate them around common priorities, including technology, innovation, and, increasingly, AI.
When faced with this speed of change, organizations typically try one of two approaches, both of which predictably
fail.
When faced with this speed of change, organizations typically try one of two approaches, both of which predictably fail.
The first approach revolves around central planning. Firms will perhaps appoint a Chief AI Officer to design the perfect AI strategy across the company. The problem with this is that this person would need to simultaneously understand AI applications in marketing (monthly changes), legal (quarterly shifts), finance (different vendor ecosystem), IT (different risk profiles), and operations (annual updates). Given how fast things move and how different each domain is, this is at best a herculean task, and at worst an impossible one. As a result, the central planning team becomes a bottleneck rather than a value-add.
The second approach is more a case of chaotic adoption. In this scenario, every team tends to do whatever it wants, with the (again, predictable) lack of coordination that follows. An accounting team solves a problem that finance still struggles with, but they never talk. The company pays for five different AI tools that do similar things. Nothing works together. No one learns from anyone else.
The characteristics that create competitive advantage can also leave an economy exposed when conditions change.
In Switzerland, Indergand identified “institutions, stability, the openness of our economy” among the country’s fundamental strengths, helping it remain among the world’s most competitive economies despite successive external shocks.
Yet that openness inevitably creates dependencies. “We are heavily interconnected, heavily dependent on trade,” Indergand said, “and I think this is a strength we need to preserve.”
Rather than retreating from the international connections on which Switzerland’s prosperity depends, he pointed to “the capacity to adapt to shocks, the openness to structural change, and the flexibility that our companies have shown.”
The characteristics that create competitive advantage can also leave an economy exposed when conditions change. For Switzerland, preserving the benefits of openness therefore depends partly on its capacity to absorb the shocks that come with it.
Indergand also returned repeatedly to stability. “What we have seen in past years is a huge rise in uncertainty,” he said, pointing to economic crises, the pandemic, and political uncertainty. “What we hear from companies and from investors in such an environment, it’s not a good idea to add uncertainty… on top of that into the system or within your own territory.”
The same qualities that helped build South Korea’s success are also creating challenges of their own. Kim noted that a significant part of South Korea’s economy is concentrated in five major industries – semiconductors, shipbuilding, automobiles, biotechnology, and advanced manufacturing.
“We have to diversify,” said Kim, describing the need to develop industries beyond those five as “one of the big tasks” facing the country if it is to become more competitive.
South Korea is also contending with a rapidly aging population and a shrinking younger workforce. At the same time, its close security relationship with the US and deep economic relationship with China leave it navigating growing geopolitical tensions between the two.
Kim described “resilience” as increasingly important, both in responding to economic crises and geopolitical fragmentation. South Korea, he said, is “very close allied to US” while also having a “very strong partnership with China, especially economically.” That leaves the country needing to diversify while considering how its position as a middle power can help sustain a rules-based international order.
Canada faces a related question about how its domestic model translates into influence abroad. Lemieux linked its competitiveness agenda to the growing debate about the role of middle powers, combining a desire for greater diversification with the stability and strong institutions that have long underpinned the Canadian economy.
“I really think this is about a strategic vision,” he said. “It is about looking at your role as a middle power in the world, and then how do you put that all together to ensure your competitiveness and prosperity into the future?”
None offers a model that can simply be transplanted elsewhere.
Switzerland, South Korea, and Canada have arrived at very different combinations of strengths. Switzerland couples openness with stability, strong institutions, and adaptability. South Korea has deliberately connected education, research, industrial policy, and business around strategic industries, while Canada is seeking to bring together productivity, technology, talent, infrastructure, diversified trade, and institutional trust.
None offers a model that can simply be transplanted elsewhere. The more useful question is the one routinely asked in business: What is your business model?
For countries, answering it means looking beyond individual strengths to understand how they reinforce one another, where the dependencies lie, and which assumptions underpin the system. A model built for open global markets, favorable demographics, cheap energy, or a particular technological landscape may need to evolve as those conditions shift.
Competitiveness is therefore less about assembling a universal checklist of institutions, infrastructure, talent, and technology than understanding the particular system through which a country turns those assets into prosperity. Knowing what makes that system work – and recognizing when it needs to change – may be the more important source of advantage.
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