Competitiveness of Central Competitiveness of Central AsiaAsiaFindings from the Central Asian Competitiveness Outlook

Margareta Drzeniek HanouzDirector, Senior EconomistCentre for Global Competitiveness and PerformanceWorld Economic Forum

Astana Economic Forum, Astana, 4 May 2011

Center For Global Competitiveness and Performance

Launched in 1979 covering 16 countries

Most recently covering 139 countries

Flagship product: The Global Competitiveness Report

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 ReportKey Features

Enables for cross country comparison of 139 economies

Produced in collaboration with leading academics and research institutes worldwide

Includes comprehensive dataset on competitiveness.

A) The Executive Opinion Survey:

B) Other data available from international sources and data partners:

Data sources are:

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.

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

0

5,000

10,000

15,000

20,000

25,000

30,000

GD

P p

er

ca

pit

a (

PP

P)

GDP per capita (PPP) - evolution over the past 30 years

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 IndexThe 12 pillars of competitiveness

Key for

efficiency-driven economies

Key for

factor-driven economies

1. Institutions

2. Infrastructure

3. Macroeconomic stability

4. Health and primary education

5. Higher education and training

6. Goods market efficiency

7. Labor market efficiency

8. Financial market sophistication

9. Technological Readiness

10. Market size

11. Business sophistication

12. Innovation

Key for

innovation-driven economies

BASIC REQUIREMENTS

EFFICIENCY ENHANCERS

INNOVATION & SOPHISTICATION FACTORS

SEE countries are spread across almost the entire ranking

EconomyRank out of 139

Score (1 to7) Economy

Rank out of 139

Score (1 to7)

Switzerland 1 5.6 Korea, Rep. 22 4.9Sweden 2 5.6 China 27 4.8Singapore 3 5.5 Ireland 29 4.7United States 4 5.4 Estonia 33 4.6Germany 5 5.4 Czech Republic 36 4.6Japan 6 5.4 Poland 39 4.5Finland 7 5.4 India 51 4.3Netherlands 8 5.3 Brazil 58 4.3Denmark 9 5.3 Turkey 61 4.2Canada 10 5.3 Russian Federation 63 4.2Hong Kong SAR 11 5.3 Bulgaria 71 4.1United Kingdom 12 5.3 Kazakhstan 72 4.1Taiwan, China 13 5.2 Ukraine 89 3.9Norway 14 5.1 Armenia 98 3.8France 15 5.1 Mongolia 99 3.7Australia 16 5.1 Tajikistan 116 3.5Qatar 17 5.1 Kyrgyz Republic 121 3.5Austria 18 5.1 Venezuela 122 3.5Belgium 19 5.1Luxembourg 20 5.0

Mixed record over the past five years…

Kazak

hstan

Mon

golia

Tajik

istan

Kyrgy

z Rep

ublic

72 99 116 121

High 1

2

3

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

GCI 2010-2011 rank >

Deci

le rank

2.00

3.00

4.00

5.00

6.00

7.001st pillar: Institutions

2nd pillar: Infrastructure

3rd pillar: Macroeconomic environment

4th pillar: Health and primary education

5th pillar: Higher education and training

6th pillar: Goods market efficiency

7th pillar: Labor market efficiency

8th pillar: Financial market development

9th pillar: Technological readiness

10th pillar: Market size

11th pillar: Business sophistication

12th pillar: Innovation

EU 27 OECD Transition Economies Central Asia

On average, CA competitiveness lags behind the EU with institutions, infrastructure and education as particular challenges…

The performance of most countries in the region is remarkably similar across all the dimensions

4.6

4.9 4.9

5.6

6.3

5.3

4.74.9

4.7

4.9

5.7

4.4

3.7

3.5

3.0

2.5

3.2

5.2

3.4

3.5 3.6

3.1 2.7

2.1

3.0

2.1

1

4

7

Ove

rall

GC

I20

10-2

011

Inst

itutio

ns

Infr

astr

uctu

re

Mac

roec

ono

mic

envi

ronm

ent

Hea

lth a

ndp

rimar

y ed

ucat

ion

Hig

her

educ

atio

nan

d tr

aini

ng

Go

od

s m

arke

tef

fici

ency

Lab

or m

arke

tef

fici

ency

Fin

anci

al m

arke

td

evel

op

men

t

Tech

nolo

gic

alre

adin

ess

Mar

ket

size

Bus

ines

sso

phi

stic

atio

n

Inno

vatio

n

Score (1-7)Best/Worst Performer TE

Azerbaijan

Ukraine

Georgia

Moldova

Armenia

Transition Economies Average

Biggest challenge: reform of public and private institutions

0.00

1.00

2.00

3.00

4.00

5.00

6.00A. Public institutions

1. Property rights

2. Ethics and corruption

3. Undue influence

4. Government inefficiency

5. Security

EU 27 OECD Transition economies Central Asia

Infrastructure for transport and electricity is underdeveloped compared to other transition economies

1 2 3 4 5 6 7

Quality of overall infrastructure

Quality of roads

Quality of railroad infrastructure

Quality of port infrastructure

Quality of air transport infrastructure

Quality of electricity supply

Central Asia Transition economies OECD EU 27

Participation in education is high, but quality is low and ill adapted to the needs of business

2.00

3.00

4.00

5.00

6.00

5th pillar: Higher education and

training

A. Quantity of education

B. Quality of education

C. On-the-job training

EU 27 OECD Transition economies Central Asia

Goods markets are not efficient mainly due to a high extent of market dominance

4.15

2.95 3.24 3.423.91 3.98 3.90

3.35

1.00

2.00

3.00

4.00

5.00

6.00

Central Asia Transition economies OECD EU 27

Financial markets have suffered during the financial crisis, and access to finance remains a major bottleneck

1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 5.00 5.50 6.00

Availability of financial services

Affordability of financial services

Financing through local equity market

Ease of access to loans

Venture capital availability

Soundness of banks

Central Asia Transition economies OECD 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.