Ireland appears 21st in the latest rankings for the Global
Competitiveness Index (GCI) that encompasses drivers of productivity
and competitiveness in line with its position for 2005. The index
is underpinned by nine competitiveness pillars, the most problematic of
which for Ireland is identified as basic requirements - specifically
infrastructure - which should not feature for a country at Ireland's
stage of development. In terms of technological readiness,
Ireland ranked 24th, also has room for improvement.
Ireland's ranking on the complementary Business Competitiveness Index
(BCI) declined one position to 22nd. This index includes elements
relating primarily to the quality of the national business environment
where Ireland dropped 2 places relative to 2005. A measure of
company sophistication also included in the BCI also declined to 17
from 16 in 2005.
Contact: Dr. Eleanor Doyle, Competitiveness Survey Group, Dept. of
Economics, UCC: Tel.: 021 4902975 or 087 8057696: E-mail: e.doyle@ucc.ie
_______________________________________
Switzerland, Finland And Sweden Take The Lead In The Rankings Of The
World Economic Forum's Global Competitiveness Index, But US Drops
Denmark, Singapore and Japan among the top ten; the United States drops five places.
Switzerland, Finland and Sweden are the world's most competitive
economies according to The Global Competitiveness Report 2006-2007,
released today by the World Economic Forum. Denmark, Singapore, the
United States, Japan, Germany, the Netherlands and the United Kingdom
complete the top ten list, but the United States shows the most
pronounced drop, falling from first to sixth.
"The top rankings of Switzerland and the Nordic countries show that
good institutions and competent macroeconomic management, coupled with
world-class educational attainment and a focus on technology and
innovation, are a successful strategy for boosting competitiveness in
an increasingly complex global economy. Business activity in these
countries benefits from a well-developed institutional framework,
characterized by the rule of law, an efficient judicial system and high
levels of transparency and accountability within public institutions.
Excellent infrastructure is an additional positive feature of the
business environment. Our indicators point to the rapidly growing
importance of higher education and training as engines of productivity
growth. Countries that, like the Nordics, are investing heavily in
education are likely to see rising levels of income per capita, growing
success in reducing poverty and an increasing ability to establish a
presence in the global economy," said Augusto Lopez-Claros, Chief
Economist and Director of the World Economic Forum's Global
Competitiveness Network.
The rankings are drawn from a combination of publicly available hard
data and the results of the Executive Opinion Survey, a comprehensive
annual survey conducted by the World Economic Forum, together with its
network of Partner Institutes (leading research institutes and business
organizations) in the countries covered by the Report. This year, over
11,000 business leaders were polled in a record 125 economies
worldwide. The survey questionnaire is designed to capture a broad
range of factors affecting an economy's business climate that are
critical determinants of sustained economic growth. The Forum annually
delivers a comprehensive overview of the main strengths and weaknesses
in a large number of countries, making it possible to identify key
areas for policy formulation and reform.
Download the full rankings from www.weforum.org/pdf/Gcr/rankings
This year marks an important progression in The Global Competitiveness
Report's methodology, with the adoption of a new, more comprehensive,
tool to assess countries' competitiveness: the Global Competitiveness
Index (GCI). Developed for the World Economic Forum by Professor Xavier
Sala-i-Martin of Columbia University, the new index -representing two
years of collaboration with him and feedback from a broad set of users
- extends and deepens the concepts and ideas underpinning the earlier
index used by the Forum.
"The introduction of the Global Competitiveness Index is a logical
extension of the World Economic Forum's competitiveness work. Changes
in the global economy and the increasing complexity which characterize
the business environment have made it necessary to develop an
instrument that captures a larger set of factors affecting the
evolution of economic growth. We are confident that this index, elegant
in design and with a strong conceptual underpinning, will become an
important tool for dialogue with policy-makers and the business
community on the key drivers of productivity," said Augusto
Lopez-Claros.
"With the growing complexity of the global economy, The Global
Competitiveness Report is a contribution to enhancing our understanding
of the key factors which determine economic growth and will help
explain why some countries are much more successful than others in
raising income levels and opportunities for their respective
populations. By providing detailed assessments of the economic
conditions of nations worldwide, the Report offers policy-makers and
business leaders an important tool in the formulation of improved
economic policies and institutional reforms," noted Klaus Schwab,
Founder and Executive Chairman of the World Economic Forum.
Harvard Business School Professor Michael E. Porter presents the
results of the Business Competitiveness Index (BCI), an especially
useful complement to the GCI, with its emphasis on a range of
company-specific factors conducive to improved efficiency and
productivity, such as the sophistication of the operating practices and
strategies of companies and the quality of the microeconomic business
environment in which a nation's companies compete. Results of the BCI
rankings are fully reported in the Executive Summary and available
online at www.weforum.org/gcr
The World Economic Forum continues to expand geographic coverage of The
Global Competitiveness Report and with the current instalment featuring
a total of 125 economies, this Report is the most comprehensive of its
type. This year, coverage has been expanded to Angola, Barbados,
Burkina Faso, Burundi, Lesotho, Mauritania, Nepal, Suriname and Zambia.
This year's Report features a number of country-specific boxes on
Argentina, Brazil, France, Hungary, Israel, Japan, South Africa, Turkey
and the United States, providing an in-depth analysis of the issues
affecting national competitiveness. Moreover, the Report contains
a number of external studies on pertinent issues related to global
competitiveness and, more generally, themes which emanate from the
World Economic Forum's concern with growth and development. In addition
to these, the Report also includes an interview, in which the Forum's
Chief Economist Augusto Lopez-Claros talks to Harvard Professors
Richard Cooper and Kenneth Rogoff about the ramifications of global
imbalances.
The Report contains a detailed country/economy profile for each of the
125 economies featured in the study, providing a comprehensive summary
of the overall position in the Index rankings as well as a guide to
what are considered to be the most prominent competitive advantages and
competitive disadvantages of each. Also included is an extensive
section of data tables with global rankings covering over 100
indicators.
Highlights
Switzerland is number one in The Global Competitiveness Report for the
first time, reflecting the country's sound institutional environment,
excellent infrastructure, efficient markets and high levels of
technological innovation. The country has a well developed
infrastructure for scientific research, companies spend generously on
R&D, intellectual property protection is strong and the country's
public institutions are transparent and stable.
The United States, previously in first place, continues to enjoy
an excellent business environment, efficient markets and is a global
centre for technology development. However, its overall competitiveness
is threatened by large macroeconomic imbalances, particularly rising
levels of public indebtedness associated with repeated fiscal deficits.
Its relative ranking remains vulnerable to a possible disorderly
adjustment of such imbalances, including historically high trade
deficits.
As has been the case in recent years, the Nordic countries hold
prominent positions in the rankings this year, with Finland (2), Sweden
(3), and Denmark (4) all among the top ten most competitive economies.
The Nordic countries have been running budget surpluses and have lower
levels of public indebtedness on average than the rest of Europe.
Prudent fiscal policies have enabled governments to invest heavily in
education, infrastructure and the maintenance of a broad array of
social services. Finland, Denmark and Iceland have the best
institutions in the world (ranked 1, 2 and 3, respectively) and,
together with Sweden and Norway, hold top ten ranks for health and
primary education. Finland, Denmark and Sweden also occupy the top
three positions in the higher education and training pillar, where
Finland's top ranking is remarkable for its durability over time.
Germany and the United Kingdom continue to hold privileged positions,
ranked 8th and 10th, respectively. In the areas of the safety of
property rights and the quality of the judicial system, Germany is
second to none. By contrast, both countries score poorly for their
macroeconomic environments, though Germany does less well. In both
cases public sector deficits and rising levels of public indebtedness
as well as a strengthening of the currency in both countries in 2005
are the main causes of this. The United Kingdom excels in market
efficiency, enjoying the most sophisticated financial markets in the
world. Its flexible labour market and low levels of unemployment stand
in sharp contrast to Germany, whose business community is burdened with
sclerotic labour regulations. But Germany does somewhat better than the
United Kingdom in innovation indicators and the sophistication of its
business community is peerless.
Italy's competitive position has continued on a downward trend, well
established over the past few years, dropping four places to 42 in this
year's Report. The list of problems is long. Italy's underlying
macroeconomic environment is poor due to having run budget deficits
without interruption for the past 20 years. The fiscal situation has
deteriorated sharply since 2000 and public debt levels are well over
100% of GDP, among the highest in the world. The poor state of Italy's
public finances may itself reflect more deep-seated institutional
problems, which are shown in low rankings for variables such as the
efficiency of government spending, the burden of government regulation
and, more generally, the quality of public sector institutions.
As in previous years, Poland remains the worst performer among the EU
economies, with a rank of 48, right behind Greece (47) and well behind
Estonia (25), the Czech Republic (29) and Slovenia (33), Central and
Eastern Europe's top performers. Particular weaknesses in Poland stem
from the highly protected and rigid labour markets, particularly
harmful in a country where unemployment is close to 18%. As in many
transition economies, businesses have to deal with uncertainties
stemming from weak institutions, corruption and crime, favouritism, an
easily influenced judiciary and a weak property rights regime. Deeper
reforms will be necessary if Poland is to increase productivity and
stay competitive in the face of rising labour costs. Among the
candidate countries, Turkey and Croatia both seem to have benefited
from the "EU bonus", moving up impressively in the rankings by 12
places each, to positions 59 and 51, respectively.
Russia has fallen from its 53rd rank in 2005 to 62nd in 2006. The
private sector in Russia has serious misgivings about the independence
of the judiciary and the administration of justice. Legal redress in
Russia is neither expeditious, transparent nor inexpensive, unlike in
the world's most competitive economies. A ranking of only 110 among 125
countries in 2006 suggests that it is time-consuming, unpredictable and
a cost burden to enterprises. Partly because of this, the property
rights regime is extremely poor and worsening. Russia's ranking in this
indicator during the last two years has suffered a precipitous decline,
from 88 in 2004 to 114 in 2006, among the worst in the world.
Leading within Asia are Singapore and Japan, ranked 5th and 7th
respectively, closely followed by Hong Kong (11) and Taiwan (13). These
economies are characterized by high-quality infrastructure, flexible
and efficient markets, healthy and well-educated workforces and high
levels of technological readiness and innovative capacity. Malaysia,
ranked 26th overall, has one of the most efficient economies in the
region with flexible labour markets, relatively undistorted goods
markets and public institutions which in many areas (e.g., rule of law,
the legal system) are already operating at the level of the top
performing new EU members.
Korea's (24) performance is slightly more uneven than that of Malaysia.
The country has already reached world-class levels in certain areas,
such as macroeconomic management, school enrolment rates at all levels,
penetration rates for new technologies and scientific innovation, as
captured by data on patent registration. However, Korea continues to be
held back by institutional weaknesses, both public and private, for
which it has not yet reached the standards of Finland, Sweden, Denmark
or Chile. Taiwan (13) continues to operate at a high level of
efficiency but has dropped below last year's "top-ten" status. It is an
innovation powerhouse, with levels of per capita patents registration
exceeded only by the US and Japan. It continues to excel in higher
education and training indicators (ranked 7th overall) but, like Korea,
its overall rank is weighed down by weaknesses in the institutional
infrastructure.
India ranked 43rd overall with excellent scores in capacity for
innovation and sophistication of firm operations. Firm use of
technology and rates of technology transfer are high, although
penetration rates of the latest technologies are still quite low by
international standards, reflecting India's low levels of per capita
income and high incidence of poverty. Despite these encouraging
results, insufficient health services and education as well as a poorly
developed infrastructure are limiting a more equitable distribution of
the benefits of India's high growth rates. Moreover, successive Indian
governments have proven remarkably ineffective in reducing the public
sector deficit, one of the highest in the world.
China's ranking has fallen from 48 to 54, characterized by a
heterogeneous performance. On the positive side, China's buoyant growth
rates coupled with low inflation, one of the highest savings rates in
the world and manageable levels of public debt have boosted China's
ranking on the macroeconomy pillar of the GCI to 6th place - an
excellent result. However, a number of structural weaknesses need to be
addressed, including in the largely state-controlled banking sector.
Levels of financial intermediation are low and the state has had to
intervene from time to time to mitigate the adverse effects of a large,
non-performing loan portfolio. China has low penetration rates for the
latest technologies (mobile telephones, Internet, personal computers),
and secondary and tertiary school enrolment rates are still low by
international standards. By far the most worrisome development is a
marked drop in the quality of the institutional environment, as
witnessed by the steep fall in rankings from 60 to 80 in 2006, with
poor results across all 15 institutional indicators, and spanning both
public and private institutions.
As in previous years, Chile, ranked 27th, leads the rankings in
Latin America and the Caribbean. Chile's position reflects not only
solid institutions - already operating at levels of transparency and
openness above those of the EU on average - but also the presence of
efficient markets that are relatively free of distortions. The state
has played a supportive role in the creation of a credible, stable
regulatory regime. Extremely competent macroeconomic management has
been a critical element in creating the conditions for rapid growth and
sustained efforts to reduce poverty. The resources generated by Chile's
virtuous fiscal policy have gone to finance investment in
infrastructure and, increasingly, education and public health. Given
Chile's strong competitive position, the authorities will have to focus
attention on upgrading the capacity of the labour force with a view to
rapidly narrowing the skills gap with respect to Finland, Ireland and
New Zealand, the relevant comparator group for Chile.
Brazil's ranking, 66th overall, down from 57th last year, reflects a
particularly poor position in the macroeconomy pillar of the GCI
(114th, as compared to 91st in 2005), resulting from a large budget
deficit relative to that of other countries, if not to its historical
performance. High levels of government debt and a wide interest rate
spread give an indication of the heavy intermediation costs in the
Brazilian banking sector, which negatively affect private sector
investment and contribute to lower economic growth.
Mexico's ranking has remained broadly stable, moving up one place to
58. The country's somewhat uneven performance over the various pillars
of the GCI is shown by relatively high scores for health and primary
education, goods' market efficiency and selected components of
technological readiness, e.g., FDI and technology transfer, no doubt
reflecting the close links of the Mexican market to the US in the
context of NAFTA. However, this is offset by the same institutional
weaknesses as are prevalent in the rest of Latin America.
A lack of sound and credible institutions remains a significant
stumbling block in many Latin American countries. Bolivia (97), Ecuador
(90), Guyana (111), Honduras (93), Nicaragua (95) and Paraguay (106)
achieve low rankings overall and, in particular, are among the worst
performers for basic elements of good governance, including reasonably
transparent and open institutions. These countries all suffer from
poorly defined property rights, undue influence, inefficient government
operations, as well as unstable business environments. Perceived
favouritism in government decision-making, an insufficiently
independent judiciary, and security costs associated with high levels
of crime and corruption make it difficult for the business community to
compete effectively.
As in previous years, Venezuela's overall performance (88, down four
places) continues to deteriorate, despite the emergence of a government
budget surplus, a phenomenon seen in all oil-exporting countries. The
single most important obstacle to development, however, appears to be
the insufficient quality of Venezuelan institutions, especially to
combat corruption, undue influence in decision-making and to reduce
government intervention, all areas in which Venezuela figures among the
worst ranks. For all the talk about the social dimension of the
government's "benign" revolution, school enrolment rates are either
mediocre or poor, with Venezuela ranking 84th, just behind Vietnam,
Suriname and China, at the secondary school level. Venezuela's infant
mortality rate of 16 per 1,000 live births is on a par with Albania and
is higher than that of Russia or the Ukraine, two countries still
recovering from decades of public health neglect.
Within the Middle East and North Africa (MENA) region, the Gulf States
continue to perform quite well in the overall GCI rankings. The United
Arab Emirates (UAE) ranked 32nd while Qatar moved up eight places to
rank 38th. Terms-of-trade gains linked to oil prices have boosted
growth rates and reinforced already high levels of confidence in the
business community, resulting from ongoing institutional modernization
and improvements in macroeconomic management. However, in many of the
resource-rich countries, the availability of public finance appears -
at least for now - not to have translated into improvements in human
capital, which would play an important role in helping these economies
that are highly dependent on oil and vulnerable to external shocks to
diversify their economic base.
Tunisia, the most competitive economy in the region ranked 30th,
Algeria (76) and Morocco (70) all improved remarkably from last year,
thanks in part to significant improvements in institutions. Egypt
dropped nine ranks to 63rd this year, due to an extremely sharp drop of
58 places to rank 108 in the macroeconomy pillar, as it struggled with
worsening government finances and a large debt ratio. It also fell back
in the areas of higher education and training and innovation.
In sub-Saharan Africa, South Africa (45th) does particularly well in a
number of areas typically reserved for rich, innovation-driven
economies. Its economic sophistication is reflected in high ranks for
property rights, private institutions, goods and financial market
efficiency, business sophistication and innovation.
Botswana, ranked 81st, has succeeded in using its wealth from
key natural resources to boost the growth rate. Key to Botswana's
success have been its reliable and legitimate institutions, the
prudence of government spending and public trustworthiness of its
politicians. The transparency and accountability of public institutions
have contributed to a stable macroeconomic environment, efficient
bureaucracy and market-friendly regulation.
On the other hand, Tanzania and Uganda ranked 104th and 113th,
respectively, suffer from large weaknesses in health and education.
Their failure to make a significant improvement in these basic
requirements is likely to continue to dent their growth prospects.
Nigeria is down 18 places to 101, on the back of poor macroeconomic
management despite the surge in oil export revenues and Zimbabwe at 119
continues its rapid descent to the bottom of the rankings, due to a
further deterioration of the institutional climate, including the
erosion of property rights and rule of law, as well as problems of
corruption and the implications these and other factors have had for
macroeconomic management.
Notes to Editors:
Should you require country profiles or specific information, please contact gcp@weforum.org
For more information you can watch video interviews with the authors of the Report on our website at www.weforum.org/gcr
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