Azerbaijan moves up in global competitiveness rankings

Azerbaijan moves up in global competitiveness rankings

By Arthur Bayhan

The World Economic Forum released its Global Competitiveness Report (GCR) for 2013-2014 on September 4, 2013 in Geneva.

The report assesses the competitiveness landscape of 148 economies, providing insight into the drivers of their productivity, innovation and prosperity.

The report findings show that Switzerland tops the overall rankings in the Global Competitiveness Report for the fourth consecutive year. Singapore remains in second position, Finland is in third position, and Germany ranked 4th. The United States was ranked number 5, while Sweden 6, Hong Kong 7, the Netherlands 8, Japan 9, and the United Kingdom ranked at 10.

The report says that Azerbaijan continues to move up in the list and placed in 39th position by improving 7 rankings of its competitiveness this year. Azerbaijan is indeed leading the most of the transition economies, even some of the new and old members of the European Union, including Greece, Portugal, Italy, Hungary and Czech Republic.

The report ranked other countries in the region as follows: Kazakhstan placed at 50 by improving one ranking, and Kyrgyzstan ranked at 121 by improving 6 rankings. The Russian Federation ranked at 64 and Georgia at 72, Armenia at 76, Ukraine ranked at 84, and Moldova at 89.

Tajikistan, Uzbekistan and Turkmenistan are not included into the surveys of the report.

The report shows the strengths of the Azerbaijan competitiveness in the area of macroeconomic environment, which is placed in the position 8 out of 148 countries. The labor market efficiency ranked at 30. The other pillars of Azerbaijan's competitiveness ranked as follows: institutions ranked at 59, infrastructure at 69, health and primary education at 109, higher education and training 87, goods market efficiency 71, financial market development 88, technological readiness 50, market size 72, business sophistication 70, and innovation 51.

In order to further enhance its competitiveness, Azerbaijan needs to focus on the areas of health and primary education, higher education and training, and the financial sector. The other areas that need interventions are: intensity of local competition, effectiveness of anti-monopoly policy, prevalence of foreign ownership, burden of the customs procedure, imports as percentage of GDP, availability of financial services, and the 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. To enhance economic integration of the region, there is an urgent need for Tajikistan, Uzbekistan and Turkmenistan to be included into the WEF Global Competitiveness index.

The report shows that the governments of the Central Asian states remain focused on improving international competitiveness rankings to maintain long-term 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.

While the predominance of investments in the oil, gas and mineral sectors has boosted the economies, it has also slowed down 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 10 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 have become members of the World Trade Organization (WTO), the other Central Asian states such as Turkmenistan and Uzbekistan are in the initial stage of accession negotiations. 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 meet WTO requirements. The key trading partners of these countries such as Russia, Ukraine and Turkey are WTO members and are progressively updating laws and regulations based on WTO requirements. These can create barriers for these countries to enter those markets in the future.

It is more important now than ever for the Central Asian states to rethink their policies on cross-border trade and economic integration. The steps towards the economic integration will increase cross-border trade and enhance competitiveness which is the key for a sustained economic growth that ultimately generates employment and reduces poverty. Azerbaijan could play a model country role for competitiveness and act as a platform for knowledge sharing with the countries in the region.

Arthur Bayhan is senior advisor on economic growth and competitiveness with more than 20 years of project implementation experience in the areas of investment and trade facilitation, sector competitiveness, and public-private partnership development. He worked as chief of party for USAID, head of private sector development at OECD, and as advisor at the EU Commission. He is engaged in the highest levels of governments and the private sector to improve framework conditions for business enabling environments, developed sustainable economic institutions in Central Asia, Caucasia, Russia and in other transition economies as well as in South- and Southeast Asia. He is a German national and can be reached at: [email protected]

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