Hungary Slips Further In World Economic Forum Competitiveness Ranking

The United States confirmed its first position as most competitive economy in the world. “However, some weaknesses, particularly related to macroeconomic imbalances, continue to present a risk to the country's overall competitiveness potential, and to the global economy as a whole. This danger has most recently been demonstrated by the fallout and contagion caused by the country's sub-prime mortgage crisis and the ensuing global credit crunch," said Xavier Sala-i-Martin, Professor of Economics at Columbia University and Co-Editor of the Report.

Switzerland came in second, followed by Denmark, Sweden, Germany, Finland and Singapore, respectively.

Chile is the highest ranked country in Latin America, followed by Mexico and Costa Rica. China and India continue to lead the way among large developing economies.

Several countries in the Middle East and North Africa region are in the upper half of the rankings, led by Israel, Kuwait, Qatar, Tunisia, Saudi Arabia and the United Arab Emirates.

In sub-Saharan Africa, only South Africa and Mauritius feature in the top half of the rankings, with several countries from the region positioned at the very bottom.

The rankings are calculated from both publicly available data and 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 131 countries.

The survey is designed to capture a broad range of factors affecting an economy's business climate. The Report also includes comprehensive listings of the main strengths and weaknesses of countries, making it possible to identify key priorities for policy reform.

“Hungary reversed the small improvements made since 2004, eroding dramatically in corruption, staff training, and indicators related to modern management and company governance," the WEF said.

The Global Competitiveness Report's overall competitiveness ranking is the Global Competitiveness Index (GCI), which is based on 12 pillars of competitiveness, providing a comprehensive picture of the competitiveness landscape in countries around the world at all stages of development.

The pillars include: Institutions, Infrastructure, Macroeconomic Stability, Health and Primary Education, Higher Education and Training, Goods Market Efficiency, Labour Market Efficiency, Financial Market Sophistication, Technological Readiness, Market Size, Business Sophistication and Innovation.

The most competitive country in Central and Eastern Europe is Estonia (27th), followed by the Czech Republic (33rd), Lithuania (38th), Slovenia (39th), Slovakia (41st) and Poland (45th). Of the Visegrad Four, Hungary's ranking beats only that of Poland (51st).

A second part of the Report provides a more detailed examination of the microeconomic aspects of competitiveness, presented in the Business Competitiveness Index (BCI). Countries that do well on the GCI also tend to do well on the BCI but there are some important differences.

The BCI finds many European countries, especially Switzerland, Norway and Spain, to have wages much above the level supported by their competitiveness. Hungary ranks 47th, down from the 36th position last year.

The WEF said the most problematic factors for doing business in Hungary were tax regulations, tax rates and policy instability. "

Source: Portfolio Online FInancial Journal