Gold Magazine February - March 2013, Issue 23 | Page 63

competitiveness

HOW
TO SOLVE

THE COMPETITIVENESS

PROBLEM

COMPARING CYPRUS, MALTA AND LUXEMBOURG
By Irene Demetriou

T

he Global Competitiveness Report, 20122013, published by the World Economic
Forum is one of the most reliable sources
of global competitiveness standards in 144
economies. The authors provide extensive
qualitative and quantitative research in relation to each of the world’s economies and
they naturally include Cyprus in their study.
A comparison of Cyprus, Malta and Luxembourg, as three innovation-driven economies
of similar market size, demonstrates serious
weaknesses in our national infrastructure
and identifies problematic factors for doing
business in Cyprus.

The Global Competitiveness Report identifies 12 pillars upon which competitiveness is
based, each with its own sub-categories. The
main 12 pillars are institutions, infrastructure, macroeconomic environment, health
and primary education, higher education
and training, goods market efficiency, labour
market efficiency, financial market development, technological readiness, market size,
business sophistication and, finally, innovation. At the top of the competitiveness
ladder comes Switzerland, having maintained first place for three consecutive years.
Singapore is in second place with Finland
Sweden, the Netherlands, Germany, the US,
the UK, Hong Kong SAR and Japan completing the ten most competitive economies
in the world today.
The findings of the Report demonstrate
that there is no necessary trade-off between
being competitive and being sustainable. In
fact, countries such as Switzerland which
are top for competitiveness are also the best
performers in many areas of sustainability.

Such a conclusion comes to confront the
entire austerity vs. growth dilemma in view
of the ongoing euro crisis. The Global
Competitiveness Report demonstrates that
a combination of the two is the only way to
increase productivity and combat unemployment.
Cyprus has earned a Global Competitive
Index score of 4.32, and ranks 58th out of
144 economies. Cyprus’s previous ranking
(2011-2012) was 47th out of 142 economies. The euro crisis can explain this drop
to a certain extent, since it reflects the lack of
confidence on the part of the financial markets in the ability of the Southern European
economies to balance their public accounts
by curbing public spending and escaping
the vicious circle of public debt. The lack of
competitiveness in economies of Southern
Europe, including Cyprus, coupled with
high salaries, has led to unsustainable balances difficult to overturn unless measures
are taken both to stimulate growth and to
minimise public expenditure.

THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

Gold 61