Competitevenes Ranking from IMD. Interrupted Climb of Kazkahstan

In 2011, for the first time in its four years’ participation in the rankings from IMD for national competitiveness, Kazakhstan showed a negative trend. We fell back from last year's 33^rd position to the 2009 year’s level – 36^th. The largest negative contribution to this decline was made by reduced economic performance and infrastructure.

In 2011, for the first time since 1989, the two countries at once, Hong Kong and the U.S.A., were ranked by international Institute for Management Development (Switzerland) as the world’s most competitive economies, which surpassed last year’s winner – Singapore (see Table 1.). So, the U.S.A. which lost the palm in 2010 has won back its positions in the current year that mainly occurred due to relatively strong recovery of the financial markets. Sweden was ranked 4^th, demonstrating that the economic model of north Europe can also be very competitive. Germany’s position in the rankings list owing to revival of exports and a more flexible labor market looks very good, 6 points up to 10^th. Also Qatar (8^th), Korea (22^nd) and Turkey (39^th) consistently continue improving their positions. Speaking of the situation with the BRIC countries, Russia in the 2011 global rankings has been two positions up from 59^th position to 49^th. True, it still lags behind the other BRIC member countries – China (29^th), India (32^nd), and Brazil (44^th).

Commenting on the results of the study, Director of the World Competitiveness Center, Professor at IMD Stephen Garelli, noted that all those countries which have demonstrated good results in the 2011 rankings can be divided into two groups. The first involves those countries, such as China, Switzerland (5^th), and Poland (34^th), which demonstrated the ability to remain competitive even in the period of global recession. The second group involves those who even though lost their positions during the recession, are now rapidly recovering their economies; these are Singapore, Taiwan (6^th), and Sweden.

According to Mr. Garrelli, we are entering a new era, the so-called competitiveness 2.0. The world of competitive economies is becoming more and more national, when the countries are focusing to a greater extent on the capabilities inside the country. This is facilitated by a return to the ideas of industrialization, increased exports, and a more critical view of the delocalization of the economies. The states are beginning to cultivate national champions, who will play an increasingly important role in the future. Thus, the global competitiveness of 2.0 makes the governments go back to the question of national priorities.

In the current year our country has been down to the 36^th position, ranking second among the five ex-Soviet states, included in the IMD’s rankings. Among them are Estonia (33^rd), Lithuania (45^th), Russia, and Ukraine (57^th). The closest neighbors to Kazakhstan in the rankings list are Spain (35^th) and Indonesia (37^th). Even if we have lost points in one pillar by technical reasons due to the fact that in the top of the competitiveness scale a new participant appeared – the United Arab Emirates (28^th), in the other two pillars we lost our points due to the pressure of objective factors. In particular, Kazakhstan is down one point to 21^st in government efficiency, down seven points to 36^th in business efficiency and also down seven points to 46^th in infrastructure. Thus, among the four key factors, Kazakhstan showed positive dynamics only in one of them – economic performance. Here, Kazakhstan is 12 points up to 35^th.

Overall, Kazakhstan's competitiveness today is ranked by IMD as 66.152 % of the Hong Kong’s and U.S.A.’s ones. In the list of countries with the population of less than 20 million people we are down from 19^th to 21^st, and in our geographical block of countries (Europe – Middle East – Africa) from 19^th to 22^nd.

Kazakhstan’s indicators on 20 sub factors are presented in Figure 1, while the list of strengths and weaknesses of Kazakhstan’s competitiveness can be found in the relevant graphic blocks.

This year, apart from the overall rating, IMD has also published results of its first study, devoted to the Government Efficiency Gap, aimed to determine whether the countries always "have the governments they deserve."

With the coming of the recession, the government spending to support the economies reached new heights, making 47 % of the GDP, on average, for the developed countries, while in 12 European countries they already exceed the 50 % threshold. In this regard, in the new world of "state capitalism", when the governments took many economic processes under tough control, the effectiveness of the authorities is becoming a key factor of competitiveness, while the time lag between the governmental reforms and the needs of the economies continues to grow.

As part of its studies, IMD compared positions taken by each of the countries by using two factors – the government efficiency and business efficiency. It was found that in most developed countries the authorities seem much less competitive than business. For example, in Japan, the gap between the government efficiency and business efficiency is 23 points – 50^th against 27^th. Belgium looks a little bit better than that (a 16 points gap), Ireland (a 12 points gap), USA (8), and Germany (8). Regarding the developing countries, many of them have more effective governments than business. This applies to Russia, South Africa, Chile, Estonia, and Indonesia. Hong Kong, Singapore and Australia demonstrate an excellent balance between these two factors.

Speaking of the results of our country, the Kazakhstan’s government is ranked 21^st, while private business is only 36^th. Of course, such high assessment of our executive branch efficiency is good news; however, the current gap of 15 points with the business efficiency can hardly be called an achievement. Especially if one takes into consideration that experts from IMD understand under competitiveness of a country, first of all, the ability of the state to create and maintain an environment in which competitive business develops.

For more detailed information, please refer to www.imd.ch/wcc

The editorship of the Kazakhstan international business magazine expreses special thanks to IMD' World Competitiveness Center Deputy Director Suzanne Rosselet-McCauley for providing the combined data on the national competitiveness of Kazakhstan.