Saudi Arabia ranks 35th in The Global Competitiveness Report 2007-2008, released today by the World Economic Forum. Several countries in the Middle East and North Africa region are in the upper half of the rankings, led by Kuwait (30th), Qatar (31st), Tunisia (32nd), Saudi Arabia (35th) and United Arab Emirates (37th).
The United States tops the overall rankings, followed by Switzerland, Denmark, Sweden, Germany, Finland and Singapore. China and India continue to lead the way among large developing economies. Chile is the highest ranked country in Latin America, followed by Mexico and Costa Rica. In sub-Saharan Africa, only South Africa and Mauritius feature in the top half of the rankings, with several countries from the region positioned at the very bottom. Nine Asia Pacific countries are among the top 30 in the GCI rankings, led by Singapore, Japan, Korea and Hong Kong. Click here to read the highlights of the report.
“High oil prices and intensifying global trade linkages have led to very high rates of growth for the past half-decade in many of the region’s countries. Initial reform efforts carried out in recent years have also contributed to this outcome, but, as shown by the GCI results in many countries, the region is still far from realizing its full productive potential. This will require an acceleration of the reform process to tackle many of the obstacles to competitiveness and productivity outlined above. Leaders in the region must seize the opportunity afforded by the windfall oil revenues in the region, which provide a cushion for making the necessary reforms, and they must resist the temptation of allowing what may be a short-lived boon to lead to complacency,” said Margareta Dzreniek Hanouz, Senior Economist responsible for MENA competitiveness research at the World Economic Forum.
The rankings are calculated from both publicly available data and 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 131 countries. The survey is designed to capture a broad range of factors affecting an economy’s business climate. The Report also includes comprehensive listings of the main strengths and weaknesses of countries, making it possible to identify key priorities for policy reform.
“Economic policy, especially at the microeconomic level, needs to set priorities that reflect the most important constraints to competitiveness in each country. The GCR enables countries to move beyond abstract theoretical policy debates and identify the specific tasks ahead of them,” explained Michael E. Porter, Harvard Business School Professor, and Co-Director of the Report.
“In an uncertain global financial environment it is more important than ever for countries to put into place the fundamentals underpinning economic growth and development. The World Economic Forum has for many years played a facilitating role in this process by providing detailed assessments of the productive potential of nations worldwide. The Global Competitiveness Report 2007-2008 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.
The Global Competitiveness Report’s overall competitiveness ranking is the Global Competitiveness Index (GCI), developed for the World Economic Forum by Columbia University Professor Xavier Sala-i-Martin and originally introduced in 2004. This year’s GCI has been refined based on testing and expert feedback. The GCI is based on 12 pillars of competitiveness, providing a comprehensive picture of the competitiveness landscape in countries around the world at all stages of development. The pillars include: Institutions, Infrastructure, Macroeconomic Stability, Health and Primary Education, Higher Education and Training, Goods Market Efficiency, Labor Market Efficiency, Financial Market Sophistication, Technological Readiness, Market Size, Business Sophistication and Innovation.
A second part of the Report provides a more detailed examination of the microeconomic aspects of competitiveness, presented in the Business Competitiveness Index (BCI) led by Professor Porter. Countries that do well on the GCI also tend to do well on the BCI but there are some important differences. “Many countries have achieved progress by opening up to the world economy, stabilizing macroeconomic policies and removing internal barriers to competition. Our findings reveal the need to build underlying microeconomic competitiveness to translate these gains into sustained prosperity. If improvements in the business environment and company sophistication fail to materialize and they often require significant shifts in company and country nations expose themselves to declining competitiveness and are vulnerable to economic and social risks,” said Professor Porter. The BCI finds many European countries, especially Switzerland, Norway and Spain, to have wages much above the level supported by their competitiveness. The BCI rankings and subindexes on company operations and strategy, and business environment quality are found in Chapter 1.2 of the Report entitled “The Microeconomic Foundations of Prosperity: Findings from the Business Competitiveness Index.”