By Arthur Bayhan
The World Economic Forum has released its Global Competitiveness Report (GCR) for 2014 - 2015 on September 3 in Geneva.
The report assesses overall competitiveness landscape of 144 economies, providing insight into the drivers of their productivity, innovation and prosperity.
Switzerland tops the overall rankings in the Global Competitiveness Report for the fifth consecutive year. Singapore remains in second position, the United States in third position, and Finland ranked the 4th, while Germany, Japan, Hong Kong, The Netherlands, the United Kingdom and Sweden are in TOP 10.
The report identifies that Azerbaijan continues to move up in the list and placed in 38th position out of 144 economies by improving one rank as compared to 2013. Indeed, Azerbaijan is even leading the most of the European Union (EU) member states such as Lithuania which is ranked the 41st, Latvia 42nd , Poland 43rd, Malta 47th, Italy 49th, Bulgaria 54th, Cyprus 58th, Romania 59th, Hungary 60th, Slovenia 70th, Slovak Republic 75th, Croatia 77th, and Greece 81st.
In the region Azerbaijan is heading all the countries including Turkey which ranked at the 45th position, Kazakhstan placed at 50 by maintaining the same ranking. Russian Federation ranked at the 53rd position and Georgia at the 69th, Armenia at the 85th, Tajikistan at the 91st, Ukraine ranked at the 76th, and Moldova ranked at the 82nd. Kyrgyzstan ranked the 108thby improving 13 rankings. Uzbekistan and Turkmenistan are not included into the surveys of the report.
The report stipulates the strengths of Azerbaijan's competitiveness in the area of macroeconomic environment, which is placed in the best position ranked at the 9th position out of 144 countries and followed by labor market efficiency ranked at the 33rd.
The other pillars of Azerbaijan's competitiveness ranked as follow: institutions ranked at the 60th, infrastructure at 70th, health and primary education at 104th, higher education and training 90th, goods market efficiency 72nd, financial market development 89th, technological readiness at 56th, market size at 72nd, business sophistication at 80th, and innovation ranked at 59th.
Azerbaijan needs to focus on the areas of health and primary education, higher education and training, and financial sector. The other areas need interventions are: intensity of local competition, effectiveness of anti-monopoly policy, prevalence of foreign ownership, burden of customs procedure, imports as percentage of GDP, availability of financial services, and soundness of banks.
The World Economic Forum's Global Competitiveness Report is the most influential ranking of a country's economic competitiveness and it affects countries image in the world among business, governments and financial leaders. The report series remains the most comprehensive assessment of national competitiveness worldwide. Therefore, to enhance economic integration of the region, there is an urgent need for Uzbekistan and Turkmenistan to be included into the World Economic Forum Global Competitiveness index.
The report states that the governments of the Central Asian states remain focused on improving their international competitiveness rankings to maintain continued economic growth. In the past decade, the Central Asian states have achieved outstanding economic growth and have demonstrated significant progress toward functioning market economies. This success is largely the result of extensive exports of oil products and mineral resources.
Some countries in the region such as Tajikistan and Kyrgyzstan is supported by the continuation of strong inflows of remittances and increased agricultural output due to good growing conditions and high international gold and cotton prices. Record high remittances of $4.1 billion in 2013 contributed to almost of 49 percent of Tajikistan's GDP.
While the predominance of investments in the oil, gas and mineral sectors has boosted the economies, but it has also slow downed efforts to diversify economies, improve competitiveness and reposition region's economies on a more global competitive footing.
Central Asian republics have revised several laws to encourage non- oil and gas growth and overall economic development over the past 14 years. Yet reforms are still needed to improve the intensity of local competition, effectiveness of anti-monopoly policy, customs reform, food safety, foreign trade law, and subsidies, which constrain domestic and foreign investments.
Apart from Kyrgyzstan and Tajikistan, which become members of the World Trade Organization (WTO), the other Central Asian states such as Turkmenistan and Uzbekistan are still in the initial stage of the accession negotiations with the WTO. Kazakhstan and Azerbaijan that have advanced with their accession negotiations for their full membership in the WTO have adopted new legislation on patents, import and export activities, and technical barriers to trade but do not yet comply entirely with the WTO requirements.
In terms of competitiveness Azerbaijan could indeed play a model country role and act as a platform for knowledge sharing with the countries in the region.
Azerbaijan policy makers may continue with its economic reform start developing relevant national competitiveness strategies aiming at placing Azerbaijan among the top 20 countries in the next 10 years.