Ukraine down in global competitiveness ranking (10/29/06)

Ukraine down in global competitiveness ranking

World Economic Forum

GENEVA - Ukraine has seen deterioration in its competitiveness over the past year, dropping from 68th down to 78th place in the World Economic Forum's Global Competitiveness Index (GCI) rankings for 2006-2007.

The economy has grown at a healthy pace during the last couple of years but for this growth to be sustained it will be necessary to tighten policies to improve the outlook for the public finances, slow down inflation and create room in the budget for higher outlays for upgrading the country's infrastructure, noted the World Economic Forum.

More importantly, a number of reforms need to be implemented to improve the country's institutional environment and the investment climate, according to the forum's report on competitiveness. Ukraine suffers from dysfunctional property rights, perceptions of abuse and arbitrariness at all levels of government, including in the courts. While levels of corruption appear to have come down from early 2004, they are still high by international standards.

The country does better in terms of indicators that capture aspects of its human capital potential (for instance, high university enrolment rates), but this is not enough to prevent an overall low competitiveness rank, said the Global Competitiveness Report, which was released on September 26.

"The Ukrainian government has expressed a desire to be eventually considered as a possible candidate for EU accession. This makes good economic and political sense. It is to be hoped that, as in Poland, Hungary and the rest of Central and Eastern Europe, this could act as a disciplining mechanism for better policies and the modernization of the country's institutions. Without doubt, Ukraine belongs in Europe. Now it must start walking in that direction, to meet the challenges of eventual EU membership," said Augusto Lopez-Claros, chief economist and head of the World Economic Forum's Global Competitiveness Network.

Switzerland, Finland and Sweden are the world's most competitive economies according to the report. Denmark, Singapore, the United States, Japan, Germany, the Netherlands and the United Kingdom complete the top 10 list, but the United States shows the most pronounced drop, falling from first to sixth.

The rankings are drawn from a combination of publicly available hard data and the results of the Executive Opinion Survey, a comprehensive annual survey conducted by the World Economic Forum, together with its network of partner institutes (leading research institutes and business organizations) in the countries covered by the report.

This year, over 11,000 business leaders were polled in a record 125 economies worldwide. The survey questionnaire is designed to capture a broad range of factors affecting an economy's business climate that are critical determinants of sustained economic growth. The World Economic Forum annually delivers a comprehensive overview of the main strengths and weaknesses in a large number of countries, making it possible to identify key areas for policy formulation and reform.

For further information readers may log on to www.weforum.or.

The Global Competitiveness report contains a detailed country/economy profile for each of the 125 economies featured in the study, providing a comprehensive summary of the overall position in the Index rankings as well as a guide to what are considered to be the most prominent competitive advantages and competitive disadvantages of each. Also included is an extensive section of data tables with global rankings covering over 100 indicators.

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The World Economic Forum is an independent international organization committed to improving the state of the world by engaging leaders in partnerships to shape global, regional and industry agendas.

Incorporated as a foundation in 1971, and based in Geneva, Switzerland, the World Economic Forum is impartial and not-for-profit; it is tied to no political, partisan or national interests.

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