Global Outlook
As in previous years, this year’s top 10 remain
dominated by a number of European countries, with Sweden, Finland,
Denmark, Germany, and the Netherlands confirming their place among the
most competitive economies. Switzerland retains its 1st
place position, and Singapore continues its upward trend to become the
second-most competitive economy in the world, overtaking Sweden, while
the United Kingdom returns to the top 10 as it recovers from the
crisis. The United States continues the decline that began three years
ago, falling one more position to 5th place.
Serbia Summary
GCI 2008-09 Rank 85, Score 3.9
GCI 2009-10 Rank 93, Score 3.8
GCI 2010-11 Rank 96, Score 3.8
GCI 2011-12 Rank 95, Score 3.9
Serbia remains in Stage 2 (efficiency-driven
economies) along with Albania, Bosnia and Herzegovina, Bulgaria,
Macedonia, Montenegro, and Romania. Croatia is the next group of
countries transitioning from Stage 2 to Stage 3 (innovation-driven
economies), which is the most advanced stage, while Slovenia is the only
country in the region which is ranked in Stage 3.
The partner institute of WEF GCI in Serbia is the Foundation for the Advancement of Economics (FREN).
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Global Competitiveness Index (GCI)
|
2011
Rank
|
2010
Rank
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2011
Score (1-7)
|
2010
Score (1-7)
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Basic requirements
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88
|
93
|
4.3
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4.1
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1st pillar: Institutions
|
121
|
120
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3.2
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3.2
|
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2nd pillar: Infrastructure
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84
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93
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3.7
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3.4
|
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3rd pillar: Macroeconomic environment
|
91
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109
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4.5
|
4.0
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4th pillar: Health and primary education
|
52
|
50
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5.8
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6.0
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Efficiency enhancers
|
90
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93
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3.7
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3.7
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5th pillar: Higher education and training
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81
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74
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4.0
|
4.0
|
|
6th pillar: Goods market efficiency
|
132
|
125
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3.5
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3.6
|
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7th pillar: Labor market efficiency
|
112
|
102
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3.9
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4.1
|
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8th pillar: Financial market development
|
96
|
94
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3.7
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3.8
|
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9th pillar: Technological readiness
|
71
|
80
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3.6
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3.4
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10th pillar: Market size
|
70
|
72
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3.6
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3.6
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Innovation and sophistication factors
|
118
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107
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3.0
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3.0
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11th pillar: Business sophistication
|
130
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125
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3.1
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3.2
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12th pillar: Innovation
|
97
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88
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2.9
|
2.9
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Compared to the previous year, Serbia’s rankings continued to improve in infrastructure (from 107 in 2009; to 93 in 2010; to 84 in 2011) and macroeconomic environment (from 111 in 2009; to 109 in 2010; to 91 in 2011). This year, Serbia also significantly improved in technological readiness (from 80 in 2010; to 71 in 2011), and there was some improvement in market size (from 72 in 2010; to 70 in 2011).
Although Serbia’s largest decline compared to last year is in labor market efficiency,
which remains a continuous problem (decline from 85 in 2009 to 102 in
2010; and then to 112 in 2011), it should be underlined that business sophistication recorded
the biggest overall decline in the past three years – as much as 28
places (from 102 in 2009 to 125 in 2010, to 130 in 2011)! The country
continues to struggle with innovation (decline from 80 in 2009 to 88 in 2010, to 97 in 2011), goods market efficiency (from 112 in 2009 to 125 in 2010, to 132 in 2011), and institutions
which show signs of relative stability compared to the country’s scores
in the past (decline from 110 to 120 in 2010, but then only decline of
one place – from 120 to 121 in 2011). What is also worrying is that
2011 was the first year in which Serbia recorded decline in higher education and training (from 74 to 81), but also health and primary education, (from 50 to 52) which generally rank well. It may be a worrying signal for the future if this trend continues.
In terms of most problematic factors for doing business, there haven’t been much changes compared to last year. Inefficient government bureaucracy and corruption are still considered the most problematic factors for doing business with only change that corruption is now the second most problematic issue. However, it is interesting to note that policy instability is no longer identified as extremely problematic factor, and crime and theft significantly declined in importance.
The most problematic factors for doing business:
|
2011-12
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2010-11
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1. Inefficient government bureaucracy
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15.0
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1. Corruption
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16.0
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2. Corruption
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14.2
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2. Inefficient government bureaucracy
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12.6
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3. A2F
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10.0
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3. Policy instability
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10.3
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4. Inflation
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9.6
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4. A2F
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9.1
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5. Government instability
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8.6
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5. Tax regulations
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8.9
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6. Tax rates
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7.9
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6. Crime and theft
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8.3
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If we look at the Global Competitiveness Index in detail, Serbia’s notable competitive advantages are fixed telephone lines (26th out of 142 countries), tertiary education enrollment rate (50/142), total tax rate (50/142), time required to start a business (51/142), redundancy costs (50/142), legal rights index (20/142), and internet bandwidth (34/142).
On the other hand, Serbia is in the ten worse ranked countries in:
|
Indicator
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Serbia’s ranking (out of 142 countries)
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Competitiveness Pillar
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Protection of minority shareholders’ interests
|
140
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Institutions
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Brain drain
|
139
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Labor market efficiency
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Extent of market dominance
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139
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Goods market efficiency
|
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Effectiveness of anti-monopoly policy
|
137
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Goods market efficiency
|
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Efficiency of legal framework in settling disputes
|
137
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Institutions
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|
Efficiency of corporate boards
|
136
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Institutions
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Cooperation in labor-employer relations
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136
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Labor market efficiency
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Intensity of local competition
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136
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Goods market efficiency
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Nature of competitive advantage
|
136
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Business sophistication
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|
Firm-level technology absorption
|
136
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Technological readiness
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Willingness to delegate authority
|
136
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Business sophistication
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|
Buyer sophistication
|
136
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Goods market efficiency
|
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Burden of government regulation
|
134
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Institutions
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Reliance on professional management
|
133
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Labor market efficiency
|
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Quality of port infrastructure
|
133
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Infrastructure
|
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Quality of air transport infrastructure
|
132
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Infrastructure
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Extent of staff training
|
132
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Higher education and training
|
Regional Comparison
Of the countries in the region, Serbia, Croatia,
Bosnia and Herzegovina, and Albania improved their rankings, while
Slovenia, Montenegro, Bulgaria, and Romania declined. Bosnia and
Herzegovina is still the only country in the region which ranks below
Serbia, but is slowly closing that gap.
Albania continues its rapid
improvement on the WEF Global Competitiveness Index. In 2011, the
country improved its overall GCI position by 10 places from 88 in 2010 to 78 currently.
In the past three years (from 2009), Albania improved 18 places (from
96 in 2009), and in 2010 ranked above Serbia for the first time.
Albania ranks extremely well in burden of government regulation (9th place out of 142 countries), mobile telephone subscriptions (18/142), time required to start a business (9/142), pay and productivity (17/142), and legal rights index (8/142). Access to finance remains the most problematic issue to doing business, followed by tax rates and corruption.
Bosnia and Herzegovina (B&H) improved its overall GCI ranking by 2 places last year from 102 in 2010 to 100 in 2011. B&H ranks much better than Serbia in innovation and sophistication factors (Serbia 118, and Bosnia is 108). The most problematic factor for doing business in B&H remains access to finance, followed by tax rates, inefficient government bureaucracy, and then corruption.
Bulgaria declined in overall GCI ranking from 71 to 74. By far the greatest strength of Bulgaria is trade tariffs (4th place out of 142 countries), and its main weaknesses are corruption and inefficient government bureaucracy.
After last year’s decline of 5 positions (from 72 to 77), this year Croatia improved its rankings by 1 place (from 77 to 76).
Croatia is in a different stage of development than Serbia and is
transitioning from stage 2 to stage 3 (innovation-driven). Compared to
the rest of the region, Croatia is extremely strong in the quality of overall infrastructure, while the most problematic areas for doing business in Croatia are inefficient government bureaucracy and corruption.
After significant improvement last year (from 84 in 2009 to 79 in 2010), FYR Macedonia maintained its rankings in 2011. Its greatest strengths are number of days to start a business and total tax rate (in both it ranks 3rd out of 142 countries), as well as investor protection (20). The most problematic factors for doing business in FYR Macedonia are inefficient government bureaucracy and access to finance.
Montenegro recorded the most dramatic fall in the GCI rankings from 49 in 2010 to 60th place in 2011.
However, its rankings are still significantly higher than most of the
countries in the region. Montenegro ranks very good across the board
except for the quality of infrastructure (107/142), available airline seats (124/142), gross national savings (139/142), primary education enrollment (107/142), intensity of local competition (121/142), soundness of banks (107/142), and market size in general. Access to finance is by far the biggest problem for doing business in Montenegro, followed by tax rates.
Romania also significantly fell compared to last year, from 67 in 2010 to 77 in 2011. Its main strengths are trade tariffs (4/142) and market size in general. By far its greatest weaknesses are transparency of government policymaking, where Romania ranks 140 out of 142 countries, and quality of overall infrastructure (139/142). The most problematic factors for doing business in Romania are tax rates and inefficient government bureaucracy.
Conclusion
The results show that while competitiveness in
advanced economies has stagnated over the past seven years, in many
emerging markets it has improved, placing their growth on a more stable
footing and mirroring the shift in economic activity from advanced to
emerging economies. After a number of difficult years, a recovery from
the economic crisis is tentatively emerging, although it has been very
unequally distributed: much of the developing world is still seeing
relatively strong growth, while most advanced economies continue to
experience sluggish recovery, persistent unemployment and financial
vulnerability. Xavier Sala-i-Martin, Professor of Economics, Columbia
University, USA, and co-author of the report emphasized that “For the
recovery to be put on a more stable footing, emerging and developing
economies must ensure that growth is based on productivity
enhancements.”