The World Economic Forum’s Global Competitiveness Report for 2014-2015 ranks Ethiopia at 118th out of 144 countries, nine steps up from last year’s ranking which was 127th. The report claims that the country faces challenges across different pillars in the rankings based on the functioning of its institutions. It states that institutions receive weaker assessment across almost all indicators, including property rights, ethics and corruption. It also states that the country’s goods market which is ranked 124th remains inefficient.
According to the report, Ethiopia also requires significant improvements in the area of infrastructure, higher education and training as well as technological readiness.
On the brighter side, the report states that Ethiopia has improved and continues to improve in several areas. For example, it notes, there is an improvement in the country’s labor market, although there are some issues with the quality of labor-employer relations and ranked Ethiopia 97th, hiring and firing practices ranked at 78th and the alignment between pay and productivity ranked at 99th.
When it comes to primary education, the net enrollment which has reached 86 percent is also a positive point for Ethiopia along with the fact that women account for a high percentage.
Looking at the Sub-Saharan region as a whole, the report states that the region has continued to register an impressive, close to 5 percent, growth rate. But in order for the region to maintain the momentum, it needs to move towards more productive activities and address the persistent competitiveness challenges.
The report shows that only three sub-Saharan economies; Mauritius at 39th, South Africa 56th and Rwanda 62nd, score in the top half of the rankings.
The biggest challenge the region faces is addressing human and physical infrastructure issues that continue to hamper capacity and affect its ability to enter higher value added markets.
Looking at the Middle East and North Africa, the report says there is a mixed picture. The United Arab Emirates that is ranked in 12th place takes the lead and moves up seven places, ahead of Qatar which is ranked 16th.
In Northern Africa, Morocco is the highest placed at 72nd. Ensuring structural reforms, improving the business environment, and strengthening the innovative capacity so as to enable the private sector to grow and create jobs are of key importance to the region, the report states.
Singapore is placed 2nd making it one of the most competitive countries in the world. The report says that the competitiveness dynamics in South-East Asia are remarkable. Behind Singapore, the region’s five largest countries; Malaysia ranked 20th, Thailand ranked 31st, Indonesia at 34th, the Philippines at 52nd and Vietnam at 68th, are all progressing in their rankings.
The report shows that Philippines is the most improved country overall since 2010 and by comparison, South Asian nations lag behind than other regions excluding India, which was featured on the top half of the rankings.
When it comes to Europe, the report states that several countries that were severely hit by the economic crisis such as Spain ranked at 35th, Portugal at 36th and Greece placed at 81st have made significant effort to improve the functioning of their markets and the allocation of productive resources.
On the other hand, a number of countries such as France at 23rd and Italy at 49th, continue to face major competitiveness challenges.
“While the divide between a highly competitive North and a lagging South and East persists, a new outlook on the European competitiveness divide between countries implementing reforms and those that are not can now also be observed,” the report reads.
Some of the world’s largest emerging market economies continue to face difficulties in improving competitiveness. Saudi Arabia ranked 24th, Turkey ranked 45th, South Africa ranked 56th, Brazil ranked 57th, Mexico ranked 61st, India ranked 71st and Nigeria ranked at 127th, all fall in the rankings.
On the other hand China, the world’s second biggest economy and who has been ranked 28th, goes up one position and remains the highest ranked BRICS economy.
While working to boost its economic resilience and keep the economic momentum of past years, Latin America still finds its major economies in need of implementing reforms and engaging in productive investments to improve infrastructure, skills and innovation.
Chile has been ranked 33rd and continues to lead the regional rankings ahead of Panama ranked at 48th and Costa Rica ranked at 51st.
The Global Competitiveness Report’s competitiveness ranking is based on the Global Competitiveness Index (GCI), which was introduced by the World Economic Forum in 2004. Defining competitiveness as the set of institutions, policies and factors that determine the level of productivity of a country, GCI scores are calculated by drawing together country-level data covering 12 categories, the pillars of competitiveness, that collectively make up a comprehensive picture of a country’s competitiveness. The 12 pillars are: institutions, infrastructure, 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.