Qatar, UAE and Saudi Arabia boasting their competitive edge
In its latest Economic Brief, NBK notes that Qatar, the UAE and Saudi Arabia, ranked 13th, 19th and 20th, respectively, are among the top 20 most competitive economies in the world, according to the World Economic Forum’s (WEF) Global Competitiveness Report 2013-14. While Switzerland has reaffirmed its place as the most competitive economy in the world for the fifth year in a row, the three GCC states head the list of Arab countries in the rankings.
The report defines competitiveness as the ‘set of institutions, policies and factors that determine the level of productivity of a country.’ These ‘12 pillars of competitiveness’ include the institutional and infrastructural underpinnings of an economy, the efficiency of its goods and labour markets, its macroeconomic performance and level of technological readiness, higher education and innovation. Productivity, in turn, is a critical driver of growth, investment returns and overall prosperity. A competitive economy is therefore one that produces, invests, grows and, ultimately, prospers more.
Qatar’s sustained competitiveness—it has topped the rankings as the most competitive Arab economy for the last six years—is built on its strong institutional framework, stable macroeconomy, efficient goods market, and sophisticated business environment. The UAE’s competitive advantages include high quality infrastructure, macroeconomic stability and a readiness to adopt new technologies. Saudi Arabia, meanwhile, benefits especially from the large size of its market. Kuwait, which along with the UAE was the only GCC country to improve its ranking in this year’s index, climbing one place, boasts the most stable macroeconomic environment in the Arab Middle East.
Improving the competitiveness further of the GCC countries will require addressing and removing a number of constraints generally common to all the countries in the region. These have been identified in the WEF Executive Opinion Survey 2013-14, an annual questionnaire in which business executives cite the most problematic factors for doing business in their countries. Respondents rated restrictive labor regulations, an inadequately educated workforce, an inefficient government bureaucracy, access to financing, and a poor work ethic among the national population as especially problematic.
For the GCC states, as with all emerging economies, transitioning to the higher stages of economic development will require a concerted focus on structural reforms and investments; the onus will be on going beyond the importation and adoption of cutting-edge technology to the creation of new value-added products, processes and business models through innovation. With their ample financial resources, GCC countries should be better placed than most to make that transition.