Competitiveness of Central Asia
Findings from the Central Asian Competitiveness Outlook
Margareta Drzeniek Hanouz Director, Senior Economist Centre for Global Competitiveness and Performance World Economic Forum Astana Economic Forum, Astana, 4 May 2011
Center For Global Competitiveness and Performance
Flagship product: The Global Competitiveness Report Launched in 1979 covering 16 countries Most recently covering 139 countries
Other special topic and regional reports:
The Global Enabling Trade Report 2010-2011 The Travel & Tourism Competitiveness Report 2011 The Global Information Technology Report 2010-2011 (to be released in April 2011) The Africa Competitiveness Report 2011 (to be released in May 2011) The Russia Competitiveness Report (to be released in June 2011)
The Indonesia Competitiveness Review 2011 (to be released June 2011)
Global Competitiveness Report Key Features
Enables for cross country comparison of 139 economies Produced in collaboration with leading academics and research institutes worldwide Includes comprehensive dataset on competitiveness.
Data sources are:
A) The Executive Opinion Survey:
Qualitative data capturing the perspectives of business leaders around the world Respondents ccompare their national operating environment with international standards on a wide range of dimensions.
B) Other data available from international sources and data partners:
Quantitative measures comparable across countries. Some of the international sources used are the World Bank, the International Monetary Fund, UNESCO, ITU.
What we try to measure: Different growth paths
GDP per capita (PPP) - evolution over the past 30 years
30,000
25,000
GDP per capita (PPP)
20,000
15,000
10,000
5,000
China
Korea
Nigeria
Definition of competitiveness
How we define competitiveness: The set of institutions, policies, and factors that determine the level of productivity of a country The level of productivity, in turn, sets the sustainable level of prosperity that can be earned by an economy.
The Global Competitiveness Index
The 12 pillars of competitiveness
BASIC REQUIREMENTS
1. 2. 3. 4.
Institutions Infrastructure Macroeconomic stability
Health and primary education
Key for
factor-driven
economies
EFFICIENCY ENHANCERS
5. 6. 7. 8. 9. 10.
Higher education and training Goods market efficiency Labor market efficiency
Financial market sophistication
Key for
efficiency-driven
economies
Technological Readiness Market size
INNOVATION & SOPHISTICATION FACTORS
Key for
11. 12.
Business sophistication
Innovation
innovation-driven
economies
SEE countries are spread across almost the entire ranking
Economy Switzerland Sweden Singapore United States Germany Japan Finland Netherlands Denmark Canada Hong Kong SAR United Kingdom Taiwan, China Norway France Australia Qatar Austria Belgium Luxembourg Rank out of 139 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Score (1 to7) 5.6 5.6 5.5 5.4 5.4 5.4 5.4 5.3 5.3 5.3 5.3 5.3 5.2 5.1 5.1 5.1 5.1 5.1 5.1 5.0 Rank out Score Economy of 139 (1 to7) Korea, Rep. 22 4.9 China 27 4.8 Ireland 29 4.7 Estonia 33 4.6 Czech Republic 36 4.6 Poland 39 4.5 India 51 4.3 Brazil 58 4.3 Turkey 61 4.2 Russian Federation 63 4.2 Bulgaria 71 4.1 Kazakhstan 72 4.1 Ukraine 89 3.9 Armenia 98 3.8 Mongolia 99 3.7 Tajikistan 116 3.5 Kyrgyz Republic 121 3.5 Venezuela 122 3.5
Mixed record over the past five years
Ka za kh st on go lia ta n Ky rg yz
121
GCI 2010-2011 rank > High
72
99
116
1 2 3
Decile rank
4 5 6 7 8 9
Low
10
Decile rank GCI 2010-2011 GCI 2005-2006 or edition of earliest inclusion No change in decile ranking
Ta jik is
ep ub lic
an
On average, CA competitiveness lags behind the EU with institutions, infrastructure and education as particular challenges
12th pillar: Innovation 11th pillar: Business sophistication
1st pillar: Institutions 7.00
6.00
2nd pillar: Infrastructure 3rd pillar: Macroeconomic environment
5.00
4.00
3.00 10th pillar: Market size 2.00 4th pillar: Health and primary education
9th pillar: Technological readiness 8th pillar: Financial market development 7th pillar: Labor market efficiency
5th pillar: Higher education and training 6th pillar: Goods market efficiency
EU 27
OECD
Transition Economies
Central Asia
The performance of most countries in the region is remarkably similar across all the dimensions
7
Best/Worst Perf ormer TE
Score (1-7)
6.3
Azerbaijan
5.7
Ukraine
4.9
5.6
5.3
Georgia
4.6
4.9
5.2
4.9
4.9 4.7 4.4
4.7
Moldova
4
3.7
Armenia
3.5
3.5
3.6
Transition Economies Average
3.2
3.0
3.4 3.0 3.1 2.7
2.5
2.1 2.1
Health and primary education
Higher education and training
Business sophistication
Technological readiness
Institutions
Macroeconomic environment
Inf rastructure
Goods market ef f iciency
Overall GCI 2010-2011
Labor market ef f iciency
Financial market development
Market size
Innovation
Biggest challenge: reform of public and private institutions
A. Public institutions 6.00 5.00 4.00
5. Security
3.00
2.00 1.00 0.00
1. Property rights
4. Government inefficiency
2. Ethics and corruption
3. Undue influence
EU 27
OECD
Transition economies
Central Asia
Infrastructure for transport and electricity is underdeveloped compared to other transition economies
Quality of electricity supply Quality of air transport infrastructure Quality of port infrastructure Quality of railroad infrastructure Quality of roads Quality of overall infrastructure 1 Central Asia 2 3 4 OECD 5 EU 27 6 7
Transition economies
Participation in education is high, but quality is low and ill adapted to the needs of business
5th pillar: Higher education and training 6.00
5.00
4.00 3.00 C. On-the-job training 2.00 A. Quantity of education
B. Quality of education EU 27 OECD Transition economies Central Asia
Goods markets are not efficient mainly due to a high extent of market dominance
6.00 5.00 4.00 3.00 2.00 2.95 4.15 3.24 3.42 3.91 3.98 3.90 3.35
1.00
Central Asia
Transition economies
OECD
EU 27
Financial markets have suffered during the financial crisis, and access to finance remains a major bottleneck
Soundness of banks Venture capital availability Ease of access to loans
Financing through local equity market
Affordability of financial services Availability of financial services 1.00 Central Asia 1.50 2.00 2.50 3.00 3.50 OECD 4.00 4.50 5.00 5.50 6.00
Transition economies
EU 27
Key messages
Countries show very similar competitiveness performance Efficient labour markets are key advantages, in some countries macroeconomic stability is high Disadvantages are related to infrastructure, institutions, quality of education, market efficiency, and financial markets Addressing challenges related to institutions is key and will require above all strong political will, but could impact on investment and growth quickly.
