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