Arab nation - competitiveness

United Arab Emirates is the most competitive among the advanced Arab countries

Tunisia and Egypt are the most competitive Arab countries in their peer groups.

Doha, Qatar 10 April 2007 – United Arab Emirates is the most competitive economy in the Arab world among the countries at the third and most advanced stage of development according to The Arab World Competitiveness Report 2007, released today by the World Economic Forum. It is followed by Qatar and Kuwait. Among countries at the second stage of development, Tunisia and Oman are the best performing Arab economies while Egypt is the regional best performer in the third group of countries.

This year’s report has expanded coverage to 13 Arab economies – Algeria, Bahrain, Egypt, Jordan, Kuwait, Libya, Mauritania, Morocco, Oman, Qatar, Syria, Tunisia and United Arab Emirates. Libya, Oman and Syria are assessed for the first time. Rankings are presented in three country groups according to the stage of development to enable benchmarking against peers in other parts of the world.

Download the full Global Competitiveness Rankings for the Arab world in Excel format.

“Today, the Arab world is at a critical juncture. Although the region’s economies are currently very dynamic and offer tremendous business opportunities, there is no doubt that improvements to national competitiveness and closer integration with the global economy and within the region are necessary if this growth momentum is to be sustained.” said Klaus Schwab, Founder and Executive Chairman of the World Economic Forum.

“The Report underscores the importance of a profound change in mindsets in order to realize the region's full potential. Entrepreneurship, an element that is often cited as the key to unlocking the potential of the Arab economies, can only take root in societies where freedom of thought, enthusiasm for inquiry and critical thinking are popular values. To that end, the pace at which the leaders of the region will address educational reform and the route that this reform will take are the determining factors when it comes to ushering in the productive power of Arab entrepreneurship. Diversification of Arab economies and improving business competitiveness are a direct function of education reform” said Sherif El Diwany, Director, Middle East , World Economic Forum.

“The rankings highlight the diversity of Arab economies and the divergent performance in terms of national competitiveness. A closer look at the results reveals that although most countries have achieved significant progress with respect to their own past, many challenges remain to be addressed. The most important weaknesses are to be found in the areas of education, low efficiency of goods markets as well as labour markets and, for the more advanced economies the very weak innovative capacity.” said Margareta Drzeniek Hanouz, Senior Economist at the World Economic Forum’s Global Competitiveness Network and Co-Editor of the Arab World Competitiveness Report.


“The current situation provides an opportune moment for forging ahead with reforms to improve national competitiveness. Educational reform is a high priority in the region, given the high unemployment rates among educated youth. Educational outputs remain mismatched with the needs of the business sector, depriving the economies of the trained talent needed to raise productivity and move up the value chain. At the same time, high unemployment and labour force growth require that governments overhaul the regulation of labour markets that rely heavily on the public sector and migrant workers.” said Tarik Yousef, Dean, Dubai School of Government.

The Arab World Competitiveness Report series serves as a platform for public-private dialogue on issues related to competitiveness as is being witnessed at the Arab World Competitiveness Roundtable in Doha in 2005. These high-level discussions use the findings of this report as a basis for competitiveness benchmarking and for advancing policy discussions.

This year’s Arab World Competitiveness Report features a progression in the methodology with respect to how the competitiveness of resource extracting economies is assessed, based on the methodology of The Global Competitiveness Report, the Global Competitiveness Index. Developed for the World Economic Forum by Professor Xavier Sala-i-Martin of Columbia University, this index provides an excellent tool for assessing and analyzing national competitiveness.

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 and other nations worldwide. Over 11,000 business leaders were polled in a record 128 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.

This year’s Report features 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. The Report contains a detailed country profile for each of the 13 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 regional rankings covering 90 indicators.

Highlights

• United Arab Emirates is at rank 29 the best performing Arab country among the 40 most advanced economies. Sound economic management has contributed to stabilizing the macroeconomic environment and strengthening public institutions. Areas of concern include educational attainment, in particular at the primary and secondary levels. These need to be tackled on a priority basis, as lack of educated workforce could put current diversification efforts at risk. For the same reasons, the country will have to increase efforts to promote innovation and tertiary education and combat red tape that constraints competition on markets for goods and services.

• Qatar ranks 32nd in the group of 40 most advanced economies. In regional comparison, it shows a relatively good track record with respect to education at all levels, yet for the country to move ahead a higher turnout of university graduates will be necessary. Qatar’s ranking among the 128 countries on this category is only 77th. Macroeconomic management has been good so far and current public investments appear to be made in the right areas, for example for improving transport infrastructure, which lags behind other countries in the region. Going forward, the capacity for innovation in the public and private sectors will have to be upgraded.

• Kuwait occupies the 37th place out of 40 countries in this group. The macroeconomic environment has markedly improved in the past few years and the country ranks first within the group on this indicator. It equally boosts a very good financial infrastructure. At the same time, improvements to the country’s higher education institutions and an enhanced innovation capacity would benefit the country’s business sector. The business community also highlighted pervasive red tape and the relatively closed nature of the economy as areas of competitive weakness – entrepreneurs find it difficult to set up shop and the country foregoes the benefits of intense competition for goods and services.

• Bahrain is ranked 39th out of 40 countries in this group and displays a number of notable strengths and weaknesses. One particular area of strength is the excellent performance on health indicators and primary education. Yet, schools could improve the preparation of graduates for positions in the private sector as well as for establishing a strong foundation for innovation. Further increases in competitiveness could be achieved through leveraging the good technological capacity of the country as well as the well developed financial markets.

• Tunisia is at 3rd place the highest ranking Arab economy among the 40 countries at the middle stage of development. Tunisia’s good results are based on strengths in the area of education, where quality is assessed as very good and universal primary education has been reached. The country also benefits from stable and efficient public institutions and shows further strengths in innovation and business sophistication. Yet, a high budget deficit and public debt coupled with weak infrastructure and a low level of sophistication of financial markets prevent the country from reaping the full benefits of a more competitive economy.

• Oman is the second best ranked Arab country in the group of countries at the middle stage of development, coming in at a 8th rank. The country’s solid outcomes on macroeconomic indicators, its well-developed institutions and high level of efficiency of labour markets contribute to this good result. The country’s competitive position is weakened by low levels of education and technological readiness as well as weak business sophistication and low capacity for innovation.

• Jordan ranks 13th among the 40 countries at the middle stage of development and the third best Arab economy in this group. Its strong performance is linked to transparent public institutions and business-friendly regulations that are easy to comply with. And the Jordanian economy is fairly open to trade and foreign participation. Yet, the macroeconomic environment remains fragile, labour markets over-regulated and latest technologies largely unused by consumers and business.

• Libya, at its first inclusion into this report, comes in at rank 26 in the group of countries in the middle stage of development. Thanks to the recent oil boom, the country excels on macroeconomic indicators, with one of the highest budgetary surpluses and one of the lowest government worldwide. Libya has only recently embarked on the process of economic reform and the list of challenges to be addressed is long. Underdeveloped physical infrastructure, weak public institutions, and low penetration of latest technologies are the most pertinent among them. But to improve its competitiveness, the country will also have to open to international competition and improve the overall level and quality of education.

• Algeria occupies the 29th rank among the 40 countries at the middle stage of development. The macroeconomic environment improved significantly with rising energy prices, public institutions are fairly sound and the population benefits from good health services and education. Making the country more competitive will require a number of basic reforms, in particular with respect to opening the country to international competition, strengthening the banking system and increasing the use of advanced technologies.

• Egypt is the best performing Arab country among the countries at the lowest stage of development, ranking 4th out of 48 countries. The well-developed physical infrastructure serves the economy well and good progress has been achieved with respect to primary education. But to fully utilize the country’s competitive potential, enhance growth and create urgently needed jobs, a number of fundamental challenges will have to be addressed, such as a soaring budget deficit, rigid labour markets and financial markets that are ill-equipped to channel financial resources into investments. Equally, the potential of latest technologies is not fully used.

• Morocco occupies the 7th place among the 48 economies at the lowest stage of development. Among the country’s strengths are the good quality of infrastructure and the relatively solid public institutions. And although penetration rates for most advanced technologies are fairly low, companies are aggressive at absorbing technology from abroad. And although local firms are sheltered from international competition administrative barriers to setting up new businesses have been reduced. Last but not least, diversification efforts will only be successful, if access to finance is facilitated and human capital advanced.

• Syria, which ranks 12th among the 48 economies at the lowest stage of development has only recently embarked on the path of economic reform. Among the country’s notable strengths are the relatively low levels of corruption and infrastructure facilities are considered to be efficient with the exception of air and sea ports. Progress has also been made with respect to health and primary education. But Syria achieves only inferior results on macroeconomic indicators with a high budget deficit and considerable public debt. Any future reform agenda should envisage a comprehensive liberalization of foreign trade and labour markets, facilitating access to finance for business as well as fostering the use of latest technologies.

• Mauritania, the country with the lowest per capita income in the Arab world and placed at 38th place out of 48 countries. The recent discovery of off-shore petroleum fields will bring strong growth over the next years and make funds available for investment in competitiveness-enhancing reforms. Mauritania suffers from a low assessment on virtually all pillars of the Index. On a positive note, public institutions are assessed as fairly well functioning given the country’s level of development with an independent jovial system in place and low distortion resulting from government regulation. Flexible labour markets complement this positive picture. The newly elected government will have to focus on stabilizing the macroeconomic environment and upgrading infrastructure, education, and health. To boost productivity and create jobs, any future reform programme should include a significant liberalization of foreign trade.

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