The economies of three GCC countries have been listed in the top 20 most competitive in the world by the World Economic Forum.
Qatar topped the region in 13 place, up two places. The UAE also improved, up five positions to 19, while Saudi Arabia declined to 20 place.
The top three countries in the annual index remained the same as last year – Switzerland, Singapore and Finland. The US ranked fifth, with the UK coming in tenth.
The UAE’s improvement was fuelled by higher oil prices, which helped boost the budget surplus, reduce public debt and raise the savings rate, the report says.
Greater investment in technology also helped increase productivity.
The UAE was ranked highly for the quality of its infrastructure (5), efficient goods market (4), macroeconomic stability (7), strong public trust in politicians (3) and high government efficiency (9).
However, the UAE ranked only 49 for health and education, with the WEF suggesting it would need to boost investment in those sectors to ensure a more stable development path.
“Raising the bar with respect to education will require not only measures to improve the quality of teaching and the relevance of curricula, but also measures to provide incentives for the population to attend schools at the primary and secondary levels,” the report says.
Qatar’s reaffirmed strong position was based on “solid foundations” including a high-quality institutional framework (4), a stable macroeconomic environment (6) and an efficient goods market (3).
“Low levels of corruption and undue influence on government decisions, high efficiency of government institutions, and strong security are the cornerstones of the country’s solid institutional framework, which provides a good basis for heightening efficiency,” the report says.
To improve, Qatar needed to diversify its economy, which is vulnerable to commodity price fluctuations and place more emphasis on developing knowledge and innovation. The country’s patenting activity remains low by international standards, at 60.
“To become a truly innovative economy, Qatar will have to continue to promote a greater use of the latest technologies, ensure universal primary education, and foster more openness to foreign competition—currently ranked at 30, a ranking that reflects barriers to international trade and investment and red tape when starting a business,” the report says.
Saudi Arabia has put in place several initiatives to improve market efficiency and the sophistication of its businesses but it fell two places in the competitiveness rankings due to continued issues, mostly in education and health.
Health and education do not meet the standards of other countries at similar income levels, the report says. The kingdom ranked 53 for this sector, with higher education and training declining to 48.
Labour market efficiency also worsened to a poor 70 position.
“Reform in this area will be of great significance to Saudi Arabia given the growing number of young people who will enter the labour market over the next several years,” the report says.
“More efficient use of talent – in particular enabling the increasing share of educated women to work – and better education outcomes will increase in importance as global talent shortages loom on the horizon and the country attempts to diversify its economy, which will require a more skilled and educated workforce.”
Saudi Arabia also trails behind all other Gulf economies when it comes to technology.
However its high macroeconomic stability (4) and strong, although falling, use of information technologies for productivity improvements contributed to the kingdom maintaining a strong position on the list.
Overall in the Middle East, political turbulence has impacted the competitiveness of countries affected by unrest, and some neighbours, WEF said.
At the same time, others, particularly energy-rich economies, in the region had performed well in the rankings.
“This underlines the fact that, contrary to the situation found in previous energy price booms, these countries have managed to contain the effects of rising energy prices on their economies and have used the window of opportunity to embark on structural reforms and invest in competitiveness-enhancing measures,” the report says.For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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