Tuesday,17 October, 2017
Current issue | Issue 1363, (5 - 11 October 2017)
Tuesday,17 October, 2017
Issue 1363, (5 - 11 October 2017)

Ahram Weekly

A real improvement?

Egypt’s improved position in this year’s Global Competitive Index may not mean that significant economic advances have taken place, reports Nesma Nowar

 

#More investments are needed in the education system # More investments are needed in the education system
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Egypt stepped up 15 spots to rank 100th out of 137 nations in this year’s Global Competitive Index (GCI) (2017/2018), released at the World Economic Forum last week.

The index assesses the competitiveness landscape based on 12 “pillars”, including infrastructure, institutions, education, the labour market, technological readiness and business sophistication.

However, though Egypt improved the most in this year’s Index out of countries in the Middle East and North Africa (MENA) region, it still lags behind most of the region’s economies.

Compared to other MENA countries, Egypt has a significantly larger market, but it is far below the region’s average in terms of technological readiness and the macroeconomic environment.

The pillar in which Egypt advanced the most was financial market development, where it ranked 7th compared to 111th last year. Public institutions and infrastructure development are also showing a clear improvement.

However, Egypt performed poorly on the macroeconomic environment pillar as a result of a severe drop in the gross national savings to GDP ratio as well as high rates of inflation. Egypt is also lagging in the higher education and training and innovation pillars, ranking 100th and 109th, respectively.

The most problematic factors for doing business in Egypt, according to the index, are policy instability, inflation, corruption, inefficient government bureaucracy and an inadequately educated workforce.

Some economists are not happy with Egypt’s 15-spot advance. Hossam Badrawi, honorary chair of the Egyptian National Competitiveness Council (ENCC), said that comparing this year’s index with last year’s was the wrong approach to assess the improvements Egypt has made.

The right approach would be to compare the results with what Egypt has aimed to achieve, Badrawi commented. “According to that approach, we are staying still and in a very bad condition,” he said during a roundtable discussion at the Egyptian Centre for Economic Studies (ECES), an economic think tank in Cairo.

“We are not better than last year, and we are worse than what we want to be,” Badrawi added.

He said that Egypt had been consistently lagging in the field of human development, an area in which the country would need to improve if it wanted to be among more competitive countries.

Former deputy prime minister Ziad Bahaaeddin agreed, stressing the importance of education and saying that the education indicator in the index was the most important for Egypt’s competitiveness in the long run.

He praised Egypt’s improved position this year, however, saying that the country could set to work on some indicators immediately as they did not need additional financial resources to improve them.

The indicators include transparency of policies, in which civil society has an important role to play in formulating polices. “Partnership in economic decision-making is very important,” Bahaaeddin said during the ECES meeting.

Abla Abdel-Latif, director of the ECES, agreed that the transparency of decision-making and the uncertainty of current policies were both important areas that needed to be addressed. She also referred to the importance of education, saying that no country had been able to make real progress without prioritising education.

“We’re still far away from achieving the sustainable development we aim for,” Abdel-Latif said. She added that Egypt should undertake further fiscal and structural reform, though she also said the index should be read with caution as it suffered from methodological problems depending on “perceptions” for some of the indicators.

Such perceptions could be better or worse than the real situation on the ground, she said.

Meanwhile, the president of the American Chamber of Commerce in Egypt Tarek Tawfik praised Egypt’s improved position in this year’s index, saying that this had not happened by chance, but had come about as a result of the government’s reforms.

These would take time to feed through, he said, and he predicted that Egypt would have an even better ranking in next year’s index as the impacts of the economic reforms became more evident.

Switzerland topped this year’s rankings as the world’s most competitive country, followed by the United States, Singapore, the Netherlands and Germany.

The United Arab Emirates came first among the Arab countries, ranking 25th, followed by Qatar, at 25th, and Saudi Arabia, at 29th.

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