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1. A Time of Opportunities: The Competitiveness Performance of the Arab World Arab World Competitiveness Report 2011-2012 A total of 14 Arab countries have been added to the sample of economies covered by the GCI over the past decade. Presently, the Index captures Algeria, Bahrain, Egypt, Jordan, Lebanon, Morocco, Kuwait, Oman, Qatar, Saudi Arabia, Syria, Tunisia, United Arab Emirates, and Yemen. Libya, which has been included in past editions of the GCI, was excluded this year because it was not possible to carry out the survey during the civil unrest in the country. Table 1 shows how countries in the Arab World are allocated into the three stages and provides details about the weighting scheme. It is important to note that the GCI is calculated using two distinct types of data. Data for approximately one-third of the indicators are obtained mainly from major international organizations, such as the World Bank, International Monetary Fund, UNESCO, and so on. For the remaining indicators, data are derived from the World Economic Forum’s annual Executive Opinion Survey. By surveying business executives, it provides an assessment of the more qualitative aspects of competitiveness, as well as of dimensions for which statistical sources are not available for all countries covered by the GCI. The Survey is conducted in collaboration with partner institutions in each country, which administer the survey process. In 2011, over 14,000 business executives were surveyed in 142 countries between January and May. 3 Since 2007, the Survey data have been calculated as a moving average of the present and the previous year, in line with a Bayesian updating approach. There are several reasons for doing so. First, it renders the results less sensitive to the specific point in time when the survey is administered. Second, it increases the amount of available information by providing a larger sample size and by retaining some previous information that continues to be deemed valuable. Additionally, because the Survey is carried out during the first quarter of the year, averaging the responses from the first quarter of 2010 and the first quarter of 2011 better aligns the survey data with many of the data indicators from sources other than the Forum, which are often yearaverage data. 14 Table 1: Arab world economies by stage of development Stage 1 (factor-driven) GDP per capita (US$) < 2,000; Transition from 1 to 2 2,000< GDP per capita (US$) < 3,000; Stage 2 (efficiency-driven) 3,000 < GDP per capita (US$) < 9,000; Transition from 2 to 3 9,000< GDP per capita (US$) < 17,000; Stage 3 (innovation-driven) GDP per capita (US$) > 17,000; Arab world Other countries in this stage Important areas for competitiveness Yemen Algeria, Egypt, Kuwait, Morocco, Qatar, Saudi Arabia, Syria Jordan, Lebanon, Tunisia Oman Bahrain, United Arab Emirates Bangladesh, Bolivia, Kenya, Pakistan, Vietnam Brunei Darussalam, Indonesia, Iran, Islamic Rep., Ukraine, Venezuela, Argentina, Brazil, China, Malaysia, Mexico, Russian Federation, South, Africa, Turkey Chile, Croatia, Poland, Trinidad and Tobago Germany, Korea, Rep, Norway, Spain, United Kingdom, United States Basic requirements (60%) and efficiency enhancers (35%) Basic requirements (between 40% and 60%) and efficiency enhancers (between 35% and 50%)* Basic requirements (40%) and efficiency enhancers (50%) Basic requirements (between 20% and 40%) and efficiency enhancers (50%) Innovation factors (10% to 30%)* Basic requirements (20%) and efficiency enhancers (50%) Innovation factors (30%)* Note: For countries with a share of mineral export in total exports higher than 70% are moved towards a lower stage of development. Source: Global Competitiveness Report 2011- 2012
Box 2: The Impact of the Arab Spring on the Region’s Competitiveness Assessment The events that have become known as the Arab Spring started sweeping across the region in early 2011, bringing about political change and creating expectations of increased future prosperity. The Global Competitiveness Report covers a number of countries that were affected by these events. It is still too early to gauge the full extent of the changes on longer-term structural factors that affect competitiveness. However, given the short-term drop in economic activity expected for 2011 in some of these countries, the question arises about the extent to which the Index captures the effects of Arab Spring events on the countries’ economic potential. In sum, the extent to which current events affect competitiveness in this year’s assessment varies across countries and is impossible to quantify at this early stage. Nevertheless, we observe some shifts in the rankings. The full impact of political change on national competitiveness will thus be captured only in future iterations of the GCI. The most important element is certainly the time period reflected by the data. Although the Index captures some shifts in the competitiveness performance of selected economies, the full extent could not be captured this year due to traditional lags in data collection and presentation. Most of the quantitative data used in the Index, which account for about one-third of the variables, reflect 2010 values and therefore do not reflect the evolving situation. The Executive Opinion Survey (Survey), which accounts for the remaining data, was carried out most recently between February and May 2011, and is combined with similar data from the same period in 2010. The Survey data therefore capture the regional turbulence and political change to varying degrees. In the particular case of Libya, social unrest was so disruptive that the Survey data could not be collected, making the country’s inclusion impossible this year. Tunisia and Egypt, where the events peaked in mid-January and mid-February with the resignation of the respective presidents, are the only countries where this year’s Survey data capture the situation in the wake of political change. For both countries, GCI ranking dropped considerably – by 13 places for Egypt and eight for Tunisia. Our interpretation is that the drop reflects higher uncertainty in both countries during the early transition process, as well as heightened public awareness of persisting structural weaknesses, resulting mainly in poorer assessments of various aspects of public and private institutions and, to a lesser degree, also of goods and labor markets efficiency. To varying extents, similar effects can be observed in some other countries from North Africa and the Levant, notably Jordan, Lebanon, and Algeria. World Economic Forum 15
Page 1 and 2: Arab World Competitiveness Report 2
Page 3 and 4: Table of Contents Preface 4 Partner
Page 5 and 6: Partner Institutes Algeria Centre d
Page 7 and 8: The successful implementation of an
Page 9 and 10: 1. A Time of Opportunities: The Com
Page 11 and 12: When benchmarked against the EU, mo
Page 13: Although taken into account separat
Page 17 and 18: Table 3: Gulf economies in the GCI
Page 19 and 20: Despite these important advantages,
Page 21 and 22: Despite its undeniable potential, A
Page 23 and 24: Competitiveness of Levantine Countr
Page 25 and 26: Notes 1 For a more detailed discuss
Page 27 and 28: Efficiency Enhancers Pillar 5: High
Page 29 and 30: Notes a. Formally, for a category i
Page 31 and 32: 1.13 Business costs of terrorism To
Page 33 and 34: Macroeconomic environment 3.01 Gove
Page 35 and 36: Higher education and training 5.01
Page 37 and 38: 6.15 Degree of customer orientation
Page 39 and 40: 9.05 Broadband Internet subscriptio
Page 41 and 42: Innovation 12.01 Capacity for innov
Page 43 and 44: Key Challenges for the MENA Region
Page 45 and 46: Unemployment is particularly acute
Page 47 and 48: A bloated public sector has distort
Page 49 and 50: Food and fuel price volatility have
Page 51 and 52: Figure 5. GDP growth in the region
Page 53 and 54: Egypt and Tunisia are expected to r
Page 55 and 56: Trade diversification and intra-reg
Page 57 and 58: Figure 11. Resource-poor countries
Page 59 and 60: Figure 13. Most FDI outside the ene
Page 61 and 62: There are significant development o
Page 63 and 64: Figure 16. Tourism is a key economi
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12 OECD estimates based on ILO data
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IOM (International Organisation for
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I. The Link between FDI and Job Cre
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2. Characteristics of FDI and Job C
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The objectives of the investor also
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Figure 9. Expenditure on education
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Figure 12. VET and CET systems are
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Policies to Involve the Private Sec
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Box 6. Higher Education in Egypt: O
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Box 7. Flexicurity: The Example of
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2. Women’s Integration in the MEN
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In the MENA region, SMEs must impro
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Box 10. Economic Zones in the MENA
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The renewable energy sector's direc
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Tradable business services have sig
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To tap the full potential of the se
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Agosin, M. and R. Mayer. 2000. “F
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Messerlin, P. A. 1995. “The Impac
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———. 2008. “The Road Not Tr
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countries to assess how well their
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About the Authors Iman Al-Ayouty Im
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Acknowledgements The Arab World Com
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