Wednesday, May 29, 2013
Dubai
Financial crisis has taken a toll on European countries that are losing competitiveness, according to the latest world report issued by the Switzerland-based IMD World Competitiveness Centre.
The United States has regained the No. 1 spot in 2013 from Hong Kong, “thanks to a rebounding financial sector, an abundance of technological innovation and successful companies,” the report says.
In Europe, the most competitive nations include Switzerland (2), Sweden (4) and Germany (9), whose success relies upon export-oriented manufacturing, diversified economies, strong small and medium enterprises (SMEs) and fiscal discipline.
The UK and France in particular are losing their dominant position and competitive clout, while The Netherlands, Luxembourg and Finland need to adapt their competitiveness models to a changing environment.
Published since 1989, the World Competitiveness Yearbook is recognised as the leading annual report on the competitiveness of nations.
“Like last year, the rest of Europe is heavily constrained by austerity programmes that are delaying recovery and calling into question the timeliness of the measures proposed,” the report said.
In Southern Europe, Italy, Spain, Portugal and Greece are all lagging behind. They did not diversify their industry enough or control public spending and are now facing austerity programmes. “The fate of Ireland and Iceland shows that competitiveness needs to be sustainable, and that uncontrolled fast expansion can also lead to disaster,” it said.
Professor Stephane Garelli, director of the IMD World Competitiveness Centre, said while the Eurozone remains stalled, the robust comeback of the US to the top of the competitiveness rankings, and better news from Japan, have revived the austerity debate.
“Structural reforms are unavoidable, but growth remains a prerequisite for competitiveness. In addition, the harshness of austerity measures too often antagonizes the population. In the end, countries need to preserve social cohesion to deliver prosperity,” he said. “Generalisations are, however, misleading. True, Europe’s competitiveness is declining, but Switzerland, Sweden, Germany and Norway are shining successes.”
The Brics (Brazil, Russia, India, China and South Africa) economies enjoyed mixed fortunes. China (21) and Russia (42) rose in the rankings, while India (40), Brazil (51) and South Africa (53) all fell.
“Emerging economies in general remain highly dependent on the global economic recovery, which seems to be delayed,” the report said.
“Brazil, Russia, India, China and South Africa are immensely different in their competitiveness strategies and performance, but the BRICS remain lands of opportunities,” Garelli says.
In Latin America, Mexico (32) has seen a small revival in its competitiveness that now needs to be confirmed over time and by the continuous implementation of structural reforms.
“Latin America has been disappointing, with larger economies such as Chile, Brazil, Argentina and Venezuela all losing ground and being challenged by the emerging competitiveness of Asian nations,” the report said.
“In the end, the golden rules of competitiveness are simple: manufacture, diversify, export, invest in infrastructure, educate, support SMEs, enforce fiscal discipline, and above all maintain social cohesion,” Garelli said.
By Saifur Rahman Associate Editor
Gulf News 2013. All rights reserved.
