The global competitiveness report for 2004 was released just as Egypt was inaugurating its own, first-ever homegrown competitiveness assessment. Wael Gamal looks at both The first Egyptian competitiveness report has finally seen the light. Issued by the Egyptian National Competitiveness Council and prefaced by three ministers, the report appeared just as the 25th Global Competitiveness Report 2004, published by the World Economic Forum (WEF), exposed the Egyptian economy's deteriorating competitiveness ranking. Egypt went down from 58th place on the Growth Competitiveness Index (GCI) in 2003, to 62nd in 2004, with a score of 3.88. The GCI, which covers a total of 104 countries this year, consists of three pillars that are widely accepted as being critical to economic growth: the quality of the macro-economic environment; the state of a country's public institutions; and, given the increasing importance of technology in the development process, a country's technological readiness. With regards to the Business Competitiveness Index (BCI), which evaluates the underlying micro-economic conditions defining the current sustainable level of productivity in each of the countries covered, Egypt's rank also slumped -- from 58th in 2003 to 66th in 2004. A look at what the report says about Finland, which tops the rankings for the third time in the last four years, gives us an idea of what the Egyptian economy lacks. "The country is extremely well managed at the macro-economic level, and scores very high in those measures which assess the quality of its public institutions," the report said. "Moreover, Finland has very low levels of corruption and its firms operate in a legal environment in which there is widespread respect for contracts and the rule of law. Finland's private sector shows a proclivity for adopting new technologies, and nurtures a culture of innovation. Especially noteworthy is the fact that, for several years, Finland has been running budget surpluses, in anticipation of future claims on the budget associated with the aging of its population." The factors that make Finland's economy thrive and Egypt's slump make clear the necessity of gaining and maintaining competitiveness. Its importance is also reflected in the intense discussions of competitiveness effects on a country's continuous economic integration and successful dealings with globalisation. An increasing recognition of these kinds of challenges has motivated the founding of the Egyptian National Competitiveness Council. By releasing periodical reports on Egypt's competitiveness, the council hopes to advance this crucial element amongst the private sector, entrepreneurs and people in general. The reports will use much the same methodology of the WEF report. Egypt's competitiveness will be monitored via detailed benchmarking analysis with a peer group of developing countries, assessing ongoing progress in areas directly affecting the determinants of competitiveness at the macro level, and establishing a business-government partnership to increase it on the country level. The Egyptian report adopts a three-level definition of competitiveness -- the macro or country level, the intermediate or industries level, and the micro or enterprise level. On the macro level, an attempt is made to analyse "the country's ability to provide high quality of life to its people. The quality of life is measured in the country's ability to generate wealth to the benefit of its constituents through providing them with a positive environment that enables wealth creation by means of improvement of productivity and innovation." Much of this positive business environment would arise via cooperation between businesses and the state. By strengthening the competitiveness of all social institutions, particularly of enterprises and governmental offices, as well as various public organisations representing different interest groups, this perspective development can be achieved. The principal feature of competition is expressed by an entity's desire to be more successful than others. This also applies to Egypt's competitiveness on a regional level. In this respect, Egypt ranks fourth amongst several countries in the Middle East and North Africa region -- including Israel, Jordan, Egypt, Tunisia, Morocco and Algeria. This comparison, however, excludes several other countries in the region -- like the UAE and Bahrain -- that are far ahead of Egypt in this respect. "Egypt has the potential to improve its competitiveness," the report concludes, "because strong macro-economic policies have distanced the country from crises experienced in the mid- to late 1990s in Latin America and South Asia." A better future, however, is dependent on the "Egyptian economy['s] expedited implementation of wide-ranging economic, financial, regulatory and institutional reforms".
