Qatar, Saudi Arabia and United Arab Emirates leads the Arab World in the World Economic Forum’s latest Global Competitiveness Index report
World Economic Forum’s (WEF) latest ‘The Global Competitiveness Index‘ report lists 12 pillars of competitiveness under 3 sub-Indexes namely, Basic Requirements, Efficiency Enhancers and Innovation & Sophistication factors – as the driving factors explaining an economy’s growth potential.
Compared to previous year rankings, while the UAE moved up in ranking to 19th from 24th, Qatar and Saudi Arabia dropped from 11th to 13th and 18th to 20th, respectively.
Under ‘Basic Requirements’ sub-Index, the UAE ranked 4th, with only Singapore, Switzerland and Hong Kong ahead on that scale. Qatar came next, ranking 5th.
In the Efficiency Enhancers sub-Index, Qatar topped the region (18th), followed by the UAE (20th) and Saudi Arabia (27th). Also, in the Innovation & Sophistication factors sub-Index, Qatar again took the lead with 14th ranking, while the UAE was ranked 24th and Saudi Arabia 29th.
The report noted the stark contrast in the Arab World economies: the first category of countries that are mired under political turmoil with the continued effects of Arab Spring and its aftermath, and the other category of oil-rich countries.
The Arab World sees a twofold development in terms of competitiveness, with, on the one hand a stagnation or drop in the rankings for countries affected by political turmoil and, on the other hand, energy-rich economies performing well linked to competitiveness-enhancing structural reforms and investments, according to the report.
Arab World Urgently Needs Institutional Reform and Extra Investment in Education
The report analyzed 13 countries in the Arab World and Qatar, Saudi Arabia and United Arab Emirates led in the overall competitiveness; with Jordan slightly improving its performance. With the burgeoning population growth in the Arab World, the Competitiveness Report 2013 highlights job creation as the major economic challenge for leaders in the Middle East. Underdeveloped skills, weak institutions and labour market inefficiency are the main factors limiting competitiveness and the ability to create jobs vary across the region
The Arab world must improve its economic competitiveness if the region is to solve its biggest economic challenge of creating enough jobs for its youthful and growing population, the report added.
The report identifies a number of areas where regional leaders could prioritize reform in order to unlock barriers to job creation and private sector expansion. These barriers differ across the region: with weak institutions and labour markets singled out as the most significant areas for improvement in North Africa; weak infrastructure and institutions in the Levant; and a pervasive education and innovation gap in countries in the Gulf.
The report also finds that leaders in the Arab world who embrace the challenge of lifting competitiveness and enabling private sector growth could look forward to a “win-win” scenario, characterized by higher employment and greater social stability.
Børge Brende, Managing Director of the World Economic Forum, said:
“Strong leadership based on a shared vision of the future political and economic system will be necessary to navigate the countries of the region through the turbulent times. The findings of this report are crucial for informing the discussions at the World Economic Forum on the Middle East and North Africa.”
Erik Berglöf, Chief Economist of the EBRD, said:
“Arab world leaders must prioritize developing market institutions and structures, which can enhance the regulatory and business environment and ultimately attract more capital into the region. Sustainable growth and job creation can only come through the unleashing of the private sector. ”
Institutions and Innovation Increasingly Important for Competitiveness
The Global Competitiveness Report 2013-2014 finds highly innovative countries with strong institutions continue to top international competitiveness rankings. Switzerland topped the list, followed by Singapore and Finland. United States reverses its four-year downward trend and Japan rises to ninth place.