Second Round Again
Our country occupies 32nd place of 60 in the new competitiveness ranking, according to IMD version. For the time being, it is the highest result of Kazakhstan during all the time of its presence in the Lausanne ranking. Although we reached this level in 2012, the domestic economy can not repeat it again due to the range of fundamental infrastructural problems.
Like in the last year, top of the ranking of the International Institute for Management Development (IMD), located in Lausanne, Switzerland, was occupied by the USA with assurance and isolation from its competitors. The experts explain this fact by the stability of economy, improvements in employment rate, as well as the US dominance in the area of technology and infrastructure. The second place is occupied by Switzerland, and the third one- by Singapore, which replaced Hong Kong (4). Competitiveness of this trio is based on the export-oriented approach, business efficiency and innovations.
Based on the results of 2013, the well-being of euro zone is improved, as evidenced by the presence of Sweden (5), Germany (6), Denmark (9) and Norway (10) at the top ten positions of IMD ranking. At the same time, competitiveness of peripheral European economies is still declining. For example, Italy descended to 46th place and Greece - to 57th place.
Among the Asian countries, Japan (21), Malaysia (12) and Indonesia (37) improved their performance; the common feature is that their economies are based on the strong service sector. Against a background of political instability, Thailand weakened its positions, reaching 29th place.
The greatest progress in the ranking was shown by Romania, which moved up for 8 positions at once, placing itself as 47th country in the rating.
Directly opposite dynamics is shown by Qatar (19): due to the low performance and activities in the financial markets, this country went down for 9 positions, and Mexico ( -9, 41st place), with its competitiveness suffered as a result of GDP reduction, as well as the deterioration of business and government efficiency.
Clear regression is observed in the fast-growing economies. Among the BRICS countries, only Russia improved its position, rising from 42nd to 38th place, while China, India and Brazil went down to 23rd, 44th and 54th positions.
According to the new Director of IMD Center of Global Competitiveness, Professor Arturo Brice, the main reason for such reduction are the problems of undeveloped infrastructure, low efficiency of management and workforce market, increased against the backdrop of the economic growth slowdown and fall of the investment level. Turkey (40), the Philippines (42) and Peru (50) suffered from similar difficulties by today.
As regards post-Soviet States that included in ranking IMD, the result of Estonia (30) and Latvia (35) whose rankings were grow up on 6 lines can be considered as big breakthrough,. The third Baltic’s member, Lithuania has been slid down on 34th place.
As we mentioned, Russia grow up on 38th place, and Ukraine reserves the 49th position. However, with due regard for current escalation of tension between them, as well as imposition of sanctions from West against RF, it is possible that the positions of two countries will be reviewed in the next year.
Summing up the study results, professor Brice noted out that a key to competitiveness is the export orientation in trading activities as well as attraction of the capital and investors. "While support for the small and medium business remains an important aspect of public policy, after all, the pillars of the best economic systems are the major corporations and national companies. The prosperity requires the strong institutions, encouraging the innovations and entrepreneurship".
At the same time, he believes that in the area of competitiveness, there is no universal prescription, since much things depend on the local conditions. "Every economy is a particular case... Nowadays and more than ever, we should stop thinking from perspective of confrontation between the continents - Asia vs. Europe or Latin America, since the differences of economies within regions have significantly increased for the recent years."
Infrastructure is Backward
If we talk about Kazakhstan, in the current ranking it managed to win the last year's drop, taking 32nd place between Chile (31) and Czech Republic (33). It happened due to the progress in three of four basic factors, forming the competitiveness according to IMD version. In particular, we went up for two positions (up to 27th place) according to our economical situation by three steps (to 20th) on efficiency of government and by , for three positions (up to 33rd)- for business efficiency. Meanwhile, Kazakhstan lost another point for infrastructure, going down from 44th to 45th place. A negative trend in this area is observed for the second time in a row.
At the level of certain sub-factors, the positive dynamics was demonstrated by the domestic economy (+9, 28th place), foreign investments (+9, 20th place) and consumer prices (+6, 39th place). In the public sphere, the fiscal policy (+3, 9), institutional environment (+4, 35th place), as well as the entrepreneurship legislation (+5, 28th place) are showing the good results. Competitiveness of private business is ensured due to the good job market (+3, 9th place), performance improvement (+3, 45th place) and management (+2, 32nd place).
There were also the hacks. Referring to the data as of 2013, the IMD experts gave Kazakhstan 1st place according to the stability of the national currency. The more interesting perspective is to view the IMD score for Kazakhstan the next year, with the results of the February shock devaluation.
A catastrophic drop-down in the international trade ( -33, 52nd place) seems a very disturbing factor. Generally, it is associated with the reduction in the export of goods (55) and still high concentration of the export (57), low levels of commercial service export (58), as well as high dependence on import (57). Therefore, one shall recognize that trying to obtain the economic benefits of integration processes within the framework of the Customs Union and the Common Economic Space (CES) didn’t turn to the success.
However, infrastructure remains a main issue, restricting our competitiveness. The problem is not the current dynamics: the present ranking was undermined by only one subfactor - the scientific infrastructure (-5, 50th place). The problem is that we are placed in the lower part of Lausanne ranking due to many reasons. In concerns such basic things as the life expectancy (58), health care costs (55), level of emissions CO2 (59), GDP energy intensity (59), share of R&D expenditures (57), number of scientific papers (60), roadway network (55) and availability of computers (57).
In general, nowadays the competitiveness of Kazakhstan according to the IMD ranking was estimated at the level of 62.508% from the American indicators. Among the countries with population under 20 million people, we occupy 20th place for the third year in a row, and according to our geographical position (Europe-Middle East-Africa), we went up for one position, by placing as 19th country.
The landscape of Kazakhstan's competitiveness according to 20 subfactors is presented in Figure 1 and the list of our main weaknesses can be found in the relevant graphic blocks.
Image is Everything
Along with the main study, the IMD also introduced an exclusive ranking, dedicated to the business image of different countries, which was drafted on basis of questioning the managers from the national companies. As explained by Professor Brice: "While the economic indicators are changed annually, the perception remains for a long-term period and it can be gradually transformed... The fact how the CEO assesses the country's image, could be potentially useful for the future of competitiveness development".
It turns out that there is a strong relationship between the overall ranking of the country’s competitiveness and its international image. For example, seven out of ten economies, leading in the overall ranking 2014 are also in the top ten countries, named as the most attractive in terms of business development.
CEOs from Singapore are the most optimistic regarding the image of their country abroad (1st place). Ireland (3), Chile (7), Qatar (10) and South Korea (12) are placed higher, than in the general rating. Top managers from Taiwan (22), USA (24), France (50) and Poland (56) are the obvious pessimists in this regard.
As for Kazakhstan, we find ourselves on the 26th place in the “image” rating, leaving such mserious rivals as India (32), China (33), Turkey (35) and Russia (48) behind.
More information is available at the website: www.imd.ch/wcc