Global Competitiveness Global Competitiveness Report 2008-2009Report 2008-2009

Margareta Drzeniek, Senior EconomistWorld Economic Forum

Competitiveness in the Next DecadeKyiv | 16 June, 2009

Using Indicators to Establish and Monitor a Policy Agenda

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The Global Competitiveness NetworkOur activities

Since 1979:

Study of national competitiveness

Development of benchmarking tools (indexes) for global-, regional- and industry-specific analysis

Result dissemination, platform for dialogue

Flagship product: Global Competitiveness Report

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Launched in 1979 covering 16 countries; The Report has since expanded its coverage to 134 countries.

Co-editors: Professors Michael Porter, Xavier Sala-i-Martin and Klaus Schwab

Our goal: to provide a benchmarking tool for policymakers and business leaders

The Global Competitiveness Report

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The Global Competitiveness ReportWhat are we trying to explain?

Estonia +444%

Korea +260%

Ukraine +143%

Zimbabwe -16%

China +723%

Russia +228%

0

10,000

20,000

30,000

40,000

1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

E S T I M A T E S

Source: IMF World Economic Outlook April 2008

GDP per capita (PPP) 1992 - 2013

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The set of institutions, policies, and factors that determine the level of productivity of a country.

The level of productivity, in turn, sets the sustainablelevel of prosperity that can be earned by an economy.

The Global Competitiveness ReportOur definition of competitiveness

““ ““

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Global Competitiveness IndexThe framework

Key forefficiency-driven

economies

Key forfactor-driven

economies

1. Institutions

2. Infrastructure

3. Macroeconomic stability

4. Health and primary education

5. Higher education and training

6. Goods market efficiency

7. Labor market efficiency

8. Financial market sophistication

9. Technological Readiness

10. Market size

11. Business sophistication

12. Innovation

Key forinnovation-driven

economies

BASIC REQUIREMENTS

EFFICIENCY ENHANCERS

INNOVATION AND BUSINESSSOPHISTICATION FACTORS

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Countries by stages of developmentTransition from 1 to 2 Stage 2 Transition from 2 to 3 Stage 3

GDP per capita of US$2,000-US$3,000

GDP per capita of US$3,000-US$9,000

GDP per capita of US$9,000-US$17,000

GDP per capita more than US$17,000

Bangladesh Mali Armenia Albania Bahrain Australia

Benin Mauritania Azerbaijan Algeria Barbados Austria

Bolivia Moldova Botswana Argentina Chile Belgium

Burkina Faso Mongolia Brunei Bosnia and Herzegovina Croatia Canada

Burundi Mozambique China Brazil Estonia Cyprus

Cambodia Nepal El Salvador Bulgaria Hungary Czech Republic

Cameroon Nicaragua Georgia Colombia Latvia Denmark

Chad Nigeria Guatemala Costa Rica Lithuania Finland

Côte d'Ivoire Pakistan Iran Dominican Republic Poland France

Egypt Paraguay Jordan Ecuador Qatar Germany

Ethiopia Philippines Kazakhstan Jamaica Russian Federation Greece

Gambia, The Senegal Kuwait Macedonia, FYR Slovak Republic Hong Kong SAR

Ghana Sri Lanka Libya Malaysia Taiwan, China Iceland

Guyana Syria Morocco Mauritius Trinidad and Tobago Ireland

Honduras Tajikistan Oman Mexico Turkey Israel

India Tanzania Saudi Arabia Montenegro Italy

Indonesia Timor-Leste Venezuela Namibia Japan

Kenya Uganda Panama Korea, Rep.

Kyrgyz Republic Vietnam Peru Luxembourg

Lesotho Zambia Romania Malta

Madagascar Zimbabwe Serbia Netherlands

Malawi South Africa New Zealand

Suriname Norway

Thailand Portugal

Tunisia Puerto Rico

Ukraine Singapore

Uruguay Slovenia

Spain

Sweden

Switzerland

United Arab Emirates

United Kingdom

United States

Stage 1

GDP per capita of less than US$2,000

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Use of “hard data” (publicly available information) and survey data (from the Forum’s Executive Opinion Survey)

The Survey records the perspectives of business leaders around the world. Survey data is indispensable, particularly for variables where no reliable hard data sources exist.

The Global Competitiveness IndexData sources

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8Global Competitiveness Report 2008-2009Top 20 (out of 134)2008 2008 2007 2008 2008 2007 rank Country/economy score rank rank Country/economy score rank

1 United States 5.74 1 21 Malaysia 5.04 21

2 Switzerland 5.61 2 23 Israel 4.97 17

3 Denmark 5.58 3 28 Chile 4.72 26

4 Sweden 5.53 4 29 Spain 4.72 29

5 Singapore 5.53 7 30 China 4.70 34

6 Finland 5.50 6 31 United Arab Emirates 4.68 37

7 Germany 5.46 5 32 Estonia 4.67 27

8 Netherlands 5.41 10 45 South Africa 4.41 44

9 Japan 5.38 8 50 India 4.33 48

10 Canada 5.37 13 51 Russian Federation 4.31 58

11 Hong Kong SAR 5.33 12 60 Mexico 4.23 52

12 United Kingdom 5.30 9 63 Turkey 4.15 53

13 Korea, Rep. 5.28 11 64 Brazil 4.13 72

14 Austria 5.23 15 81 Egypt 3.98 77

15 Norway 5.22 16 96 Senegal 3.73 100

16 France 5.22 18 101 Pakistan 3.65 92

17 Taiwan, China 5.22 14 105 Venezuela 3.56 98

18 Australia 5.20 19 133 Zimbabwe 2.88 129

19 Belgium 5.14 20

20 Iceland 5.05 23

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8Global Competitiveness Report 2008-2009CEE region

Economy Rank Score Rank Delta

Estonia 32 4.67 27 -5Czech Republic 33 4.62 33 0Slovenia 42 4.50 39 -3Lithuania 44 4.45 38 -6Slovak Republic 46 4.40 41 -5Russian Federation 51 4.31 58 7Poland 53 4.28 51 -2Latvia 54 4.26 45 -9Croatia 61 4.22 57 -4Hungary 62 4.22 47 -15Montenegro 65 4.11 82 17Kazakhstan 66 4.11 61 -5Romania 68 4.10 74 6Azerbaijan 69 4.10 66 -3Ukraine 72 4.09 73 1Bulgaria 76 4.03 79 3Serbia 85 3.90 91 6Macedonia, FYR 89 3.87 94 5Moldova 95 3.75 97 2Armenia 97 3.73 93 -4Bosnia and Herzegovina 107 3.56 106 -1Albania 108 3.55 109 1Tajikistan 116 3.46 117 1Kyrgyz Republic 122 3.40 119 -3

Gobal Competitiveness Index 2008-2009 2007-2008

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Global Competitiveness Report 2008-2009 Evolution of rankings of selected EU and CIS countries 1997-2008

w ithin 1997 country sample*

13

7

18

54

12

16

2

-6

5

2

-10

-5

0

5

10

15

20

China CzechRepublic

France Germany Hungary Italy Poland RussianFederation

SlovakRepublic

Turkey Ukraine UnitedStates

w ithin 1997 country sample*Difference in ranks betw een 1997 and 2008-2009 competitive rankings

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8Global Competitiveness Report 2008-2009 Results for the EE and CIS region

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3

4

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7Institutions

Infrastructure

Macroeconomic stability

Health and primaryeducation

Higher education andtraining

Goods market efficiency

Labor market efficiency

Financial marketsophistication

Technological readiness

Market size

Business sophistication

Innovation

CIS EU Accession 12 EU 15

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Global Competitiveness Report 2008-2009Relationship between Institutions and GDP

1,000

10,000

100,000

1 2 3 4 5 6 7

Institutions pillar (score)

GD

P (

PP

P)

per

capi

ta,

2007

Ukraine

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8Global Competitiveness Report 2008-2009Results in the institutions pillar

3.6 3.53.8

4.1 4.04.5

5.3 5.25.5

1

7

A. Institutions B. Public institutions C. Private Institutions

CIS EU Accession EU 15

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8Global Competitiveness Report 2008-2009The goods market efficiency pillar

3.9 3.93.6

4.5 4.5

3.7

5.0

5.9

4.1

1

7

6th pillar: Goods marketefficiency

1. Domestic competition 2. Foreign competition

CIS EU Accession EU 15

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8Global Competitiveness Report 2008-2009The technological readiness pillar

2.9

3.84.2 4.44.3

4.9 4.9 5.05.2

5.95.6

5.2

1

7

9th pillar:Technological

readiness

Availability of latesttechnologies

Firm-level technologyabsorption

FDI and technologytransfer

CIS EU Accession EU 15

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8Global Competitiveness Report 2008-2009Ukraine: Competitive advantages

2nd pillar: Infrastructure

Quality of railroad infrastructure 30

Main telephone lines (per 100 population)* 50

3rd pillar: Macroeconomic stability

Government gross debt (% GDP)* 18

4th pillar: Health and primary education

Quality of primary education 37

5th pillar: Higher education and training

Secondary education enrollment (gross rate, %)* 50

Tertiary education enrollment (gross rate, %)* 14

Quality of the educational system 40

Quality of math and science education 32

6th pillar: Goods market efficiency

Trade-weighted tariff rate (% duty)* 49

Degree of customer orientation 50

7th pillar: Labor market efficiency

Hiring and firing practices 11

Firing costs (in weeks of wages)* 19

Pay and productivity 16

Female-to-male participation ratio in the labor force 31

8th pillar: Financial market sophistication

Strength of Legal Rights (0–10, 10 is best)* 8

9th pillar: Technological readiness

Mobile telephone subscribers (per 100 population)* 21

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8Global Competitiveness Report 2008-2009Ukraine: Competitive disadvantages1st pillar: Institutions 6th pillar: Goods market efficiency

Property rights 123 Intensity of local competition 105

Intellectual property protection 114 Extent of market dominance 75

Diversion of public funds 97 Effectiveness of anti-monopoly policy 96

Public trust of politicians 101 Extent and effect of taxation 127

Judicial independence 119 Agricultural policy costs 132

Favoritism in decisions of government officials 96 Prevalence of trade barriers 113

Wastefulness of government spending 98 Prevalence of foreign ownership 123

Burden of government regulation 91 Business impact of rules on FDI 120

Efficiency of legal framework 116 7th pillar: Labor market efficiency

Transparency of government policymaking 114 Non-wage labor costs (% worker’s salary)* 125

Ethical behavior of firms 118 Rigidity of Employment Index (0-100, 100 is worst)* 90

Strength of auditing and reporting standards 113 8th pillar: Financial market sophistication

Protection of minority shareholders’ interests 129 Financial market sophistication 91

2nd pillar: Infrastructure Financing through local equity market 92

Quality of roads 120 Restriction on capital flows 110

Quality of air transport infrastructure 105 Strength of Investor Protection (0–10, 10 is best)* 107

3rd pillar: Macroeconomic stability Soundness of banks 112

Inflation (%)* 127 Regulation of securities exchanges 120

Interest rate spread (%)* 72 9th pillar: Technological readiness

4th pillar: Health and primary education Availability of latest technologies 82

Business impact of tuberculosis 114 Firm-level technology absorption 80

HIV prevalence (% adult population)* 111 FDI and technology transfer 100

Life expectancy at birth (years)* 95

Primary education enrollment (net rate, %)* 84

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Global Competitiveness Report 2008-2009Ukraine: The most problematic factors

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Ukraine Competitiveness Report 2008Results for Ukraine’s regions

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