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Stable competitiveness
Published in Al-Ahram Weekly on 04 - 10 - 2016

Egypt retained its ranking in the 2016-2017 World Economic Forum Global Competitiveness Index (GCI), placed at 115th out of 138 countries.
The country was ranked 116th out of 140 countries in last year's GCI. The slight advance this year does not necessarily reflect better performance as there were fewer countries represented in the 2016-2017 Index.
Guinea and Haiti are missing from this year's Index, both of them ranking lower than Egypt last year.
The Global Competitiveness Index is a yearly report that assesses the competitiveness of the world's economies and highlights their key strengths and weaknesses.
It does this by assessing 12 main “pillars,” including institutions, infrastructure, the macroeconomic environment, health and primary education, higher education and training, goods market efficiency, labour market efficiency, financial market development, technological readiness, market size, business sophistication, and innovation.
This year's GCI shows that Egypt lags behind in the areas of goods, labour, and financial markets, on which the country ranks 112th, 135th, and 111th, respectively.
The GCI stresses the importance of addressing the rigidities that plague these areas, pointing also to weaknesses in higher education and training (112th), below the performance of peer economies, as well as the overall security situation (133rd), which remains fragile and imposes significant costs on business, it says.
“To create growth and employment, Egypt could build on its large market size (25th), its business sector, which by some accounts appears more sophisticated than those of neighbouring countries (85th), and its geographical proximity to the large European market,” the GCI says.
Policy instability, government instability, access to financing, foreign currency regulations, corruption and an inadequate supply of infrastructure are major hurdles to doing business in Egypt, the GCI says.
Policy instability was cited by 21 per cent of respondents as the most prominent obstacle to doing business in Egypt, followed by government instability at 12.5 per cent.
Egypt is also lagging behind other countries in the Middle East, with only Yemen ranking lower, while the United Arab Emirates, Qatar, and Saudi Arabia are the best performing countries in the region and among the GCI's top 30 countries.
The country is also performing badly compared to other economies at the same level of development, such as China, Thailand, Indonesia, Iran and Jordan.
Ahmed Galal, managing director of the Economic Research Forum (ERF), an NGO, said that the GCI was important because it showed Egypt's competitiveness ranking compared with other countries, stressing the importance of competitiveness to the economy.
“Competitiveness is our way to achieve efficiency and thus economic growth,” he said at a seminar organised by the Egyptian Centre for Economic Studies (ECES), a think tank, this week to announce the results of the GCI.
However, Galal criticised the GCI for highlighting weaknesses without offering solutions or means for improvement.
Abla Abdel-Latif, executive director of the ECES, also criticised the methodology of the GCI. Part of the findings is based on surveys of the country's private sector, she said, but the questions in the surveys were highly specialised and sometimes came with a limited choice of answers, leading to imprecise findings.
However, she stressed the importance of redressing the obstacles standing in the way of doing business in Egypt and focusing on reforms.
Galal said the only way that reform and development could take place was by creating a “political market” in which the whole of society could participate in a dialogue about reforms.
Ziad Bahaaeddin, former deputy prime minister and managing partner of Thebes Consultancy, a consulting firm, said the most important elements affecting a country's competitiveness were infrastructure and the legal system.
He said the problem in Egypt with regard to legal reforms was that the government had adopted a “quick-win” approach to reform that entailed finding quick solutions to economic problems in a way that had hindered Egypt's development over the last decade.
“This has blocked us from achieving the substantial reforms we need for the coming 40 years,” Bahaaeddin said.
Switzerland has been ranked as the most competitive economy in the world for eight years in a row in the GCI, followed by Singapore, the United States, the Netherlands and Germany.
Chad, Mauritania and Yemen have been ranked as the least competitive.


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