Thierry Geiger, Economist @ Centre for Global Competitiveness and Performance Launch of The Ukraine Competitiveness Report 2011, Kyiv, 30 November 2011

Ukraine: Competitiveness, Trust and Confidence

2008 2009 2010 2011

Data collection

Global analysis and methodology chapter

Regional GCI calculation

Regional analysis

Report publication

Launch

Outreach activities

Training and support

Unique collaboration

Rankings countries

since 1979. The World Economic Forum is a leader in benchmarking and composite indicators

Competitiveness =

The set of institutions, policies, and factors that

determine the level of productivity of a country,

taking into account its level of development.

The 12 dimensions of the Global Competitiveness Index

Basic requirements

Efficiency enhancers

Sophistication and innovation

factors

1. Institutions

2. Infrastructure

3. Macroeconomic environment

4. Health & primary education

5. Higher education and training

6. Goods market efficiency

7. Labor market efficiency

8. Financial market development

9. Technological readiness

11. Business sophistication

12. Innovation

10. Market size

The Global Competitiveness Index

Innovation-driven stage

Transition stage Efficiency-driven stage

Transition stage

Factor-driven stage

Basic

Innovation

Efficiency

$2,0

00

$3,0

00

$9,0

00

$17,

000

GDP per capita (not to scale)

Competitiveness drivers

Stages of development and competitiveness drivers

Rank Economy Score Delta Rank Economy Score Delta

1 Switzerland 5.74 = 50 South Africa 4.34 +4

2 Singapore 5.63 +1 53 Brazil 4.32 +5

3 Sweden 5.61 -1 55 Azerbaijan 4.31 +2

4 Finland 5.47 +3 56 India 4.30 -5

5 United States 5.43 -1 59 Turkey 4.28 +2

6 Germany 5.41 -1 64 Latvia 4.24 +6

7 Netherlands 5.41 +1 66 Russia 4.21 -3

8 Denmark 5.40 +1 72 Kazakhstan 4.18 =

9 Japan 5.40 -3 77 Romania 4.08 -10

10 United Kingdom 5.39 +2 82 Ukraine 4.00 +7

26 China 4.90 +1 88 Georgia 3.95 +5

33 Estonia 4.62 = 105 Tajikistan 3.77 +11

41 Poland 4.46 -2 126 Kyrgyz Republic 3.45 -3

The Global Competitiveness Index 2011-2012

Global Competitiveness Index

Ukraine

EU Accession 12

EU 15

CIS (excl. UKR)

1

2

3

4

5

6

7

2005 2006 2007 2008 2009 2010 2011

Score

Bottom

80th

60th

20th

90th

10th

40th

70th

2005 2006 2007 2008 2009 2010 2011

30th

Median

Azerbaijan

China

Estonia

Kazakhstan

Poland

Russian Federation

Tajikistan

Ukraine

Global Competitiveness Index

Perc

entile

(%

of

countr

ies

ranked b

elo

w)

Spaghetti bowl

43% 44%

69/122 64/114 73/131 72/134 82/133 89/139 82/142

Ukraine in the 12 pillars of the GCI

3,0 3,9 4,2 5,6 4,6 3,6 4,4 3,4 3,5 3,5 3,1 2,8 1

4

7

Ukraine EU Accession 12 CIS (excl. Ukraine)

131 71 112 74 51 129 61 116 82 38 103 74 Ukraine pillar rank

GCI score

1,0

1,1

1,2

1,3

1,4

1,5

1,6

1,7

1,8

Swiss francs per Euro €

Source: European Central Bank

1.05 CHF per € on 10 August 2011

1.68 CHF per € on 12 October 2007

The Fear Factor

The Fear Factor

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

2 000

Gold prices (closing)

Source: Bundesbank

US$

$1,895 on 5 September 2011

Germany

Greece

Italy

Portugal

0

2

4

6

8

10

12

14

16

18

20

Bond yields secondary market yields of selected government bonds with a remaining maturity close to ten years

Source: European Central Bank

%

The Fear Factor

Greece-Germany spread: <1% until September 2008

Greece-Germany spread: 16% in October 2011

0

10

20

30

40

50

60

70

80

90

VIX Index Chicago Board Options Exchange Market Volatility Index

Source: CBOE

The Fear Factor

Record high on 20 November 2008

Difficult times… again

Examples betray uncertainty and lack of confidence

Investors and businesses grow increasingly risk-averse and look for security

The countries most at risk of being shun away from are those perceived as risky and with uncertain prospects

Ukraine remains one of the vulnerable countries. Why?

Indicator Rank out of 142 Score 1-7 (best)

Respect of property rights 137 2.7

Irregular payments and bribes 134 2.6

Judicial independence 134 2.1

Efficiency of legal framework in settling disputes 138 2.3

Protection of minority shareholders’ interests 138 2.9

Effectiveness of anti-monopoly policy 136 2.8

Extent and effect of taxation 141 2.2

Soundness of banks 141 2.8

Reliance on professional management 131 3.3

Selected results from the GCI for Ukraine

Source: World Economic Forum

Of the importance of trust and confidence

Lack of predictability and transparency, weak and unfair enforcement of rules, uneven playing field all lead to erosion of trust and confidence

Unfortunate, because trust and confidence influence lending, investment and hiring decisions

Building trust and restoring confidence, especially in institutions and the banking sector, is essential for competitiveness

It should be Ukraine’s priority

And with a good dose of trust and confidence…

Thank you!

www.weforum.org/gcr