Arab World Competitiveness Report 2011-2012 - World Economic ...

1. A Time of Opportunities: The Competitiveness Performance of the Arab World
Arab World Competitiveness Report 2011-2012
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Syria (98th) faces a number of important challenges
related to competitiveness, some of which have led to
ongoing social unrest since early 2011. Labor markets
are among the most inefficient worldwide (134th), due
to factors such as lack of meritocracy (139th) and
low female participation (141st). Entrepreneurs also
face significant rigidities when employing workers or
adjusting the workforce to their needs. In fact, Syria
ranks 93rd for labor market flexibility. Other markets
suffer equally from inefficiencies. Financial markets are
underdeveloped (117th), and access to finance remains
constrained for the business sector (108th) across
different types of products and services. However, in
developing its financial markets, the country can build
on a relatively sound banking system (59th). Progress in
goods market efficiency will be crucial for Syria to raise
its competitiveness. Markets remain to a large degree
dominated by few firms (118th), anti-monopoly policy
is inefficient (90th), and foreign competition remains
constrained by high tariffs (122nd), other trade barriers
(127th), cumbersome customs procedures (133rd), and
rules governing FDI that discourage foreign investors
(112th).
A longer-term challenge is to upgrade the educational
system. Although the quality of primary education is
satisfactory (67th), higher education and training lag
behind those of other economies, and are among
the key weaknesses in the country’s competitiveness
framework. Educational outcomes are poor both in
terms of enrolment rates in secondary and tertiary
education (98th and 78th, respectively) and in terms
of quality of teaching, which is particularly poor in
management schools (108th) and requires better
alignment to business needs (96th). Competitivenessenhancing
reforms would lift the country onto a higher
growth path, which in turn would enable it to pursue
greater social cohesion.
Conclusions
This chapter has analyzed the performance of 14 Arab
countries in terms of national competitiveness using
the framework of the Global Competitiveness Index.
The countries analyzed include Algeria, Bahrain, Egypt,
Jordan, Lebanon, Morocco, Kuwait, Oman, Qatar, Saudi
Arabia, Syria, Tunisia, United Arab Emirates, and Yemen.
The analysis shows that the countries are highly diverse
in terms of national competitiveness. While most Gulf
economies benefit from vast natural resources and rising
energy prices, and have used the ensuing revenues in
recent years for improvements in their competitiveness,
the challenges are more profound in North Africa and
the Levant. Economies in these two sub-regions –
with the notable exception of Tunisia, which ranks a
strong 40th out of 142 countries – display numerous
competitive weaknesses that will have to be addressed
going forward, especially in light of the employment
challenges these countries face. Most important,
education systems must be upgraded to better respond
to the needs of business, and markets must be made
more efficient by moving towards healthier competition,
fostering entrepreneurship, and supporting a more
dynamic environment for enterprises. Education and
market efficiency are the two key aspects that would
address crucial supply- and demand-side challenges to
job creation.
The Arab Spring has led to significant turbulence in
the region, which will likely influence the economic and
competitive performance of countries in the shorter
and longer term. Uncertainty about the future business
environment, as well as a heightened awareness of
some institutional weaknesses, may have adverse
effects in the short term. However, the political
changes and the recognition of the need to create
private-sector employment have significant potential
to drive the political momentum needed for enhanced
competitiveness in the medium term.
Creating gainful employment for their populations is
currently the key challenge for most of the countries
from the region. Competitiveness-enhancing reforms
will pave the way to more private-sector activity that
will lead to the creation of gainful and sustainable
employment across the region for the benefit of both
present and future generations.