Russia's up 6 points in the world competitiveness ranking
Positioned between Latvia and Peru in 2013, Russia went up 6 places on a competitiveness ladder, designed by the Switzerland-based IMD World Competitiveness Centre. The US regained its top spot with the financial sector rebound and lots of technological innovation. Switzerland and Hong Kong took 2nd and the 3rd positions.
The United Arab Emirates had the biggest breakthrough in 2013, as it jumped to 8th place from 16th. Asian powerhouses – China (21) and Japan (24) – also made progress, with the latter appearing to be enjoying the first fruit of Abenomics, the report said. Most of Europe remained mired in austerity measures, which is eating into the growth prospects in the region. And BRICS club, enjoyed mixed fortunes,remaining “lands of opportunities," as Professor Stéphane Garelli, director of the IMD World Competitiveness Center, put it.
The IMD ranking is compiled on the basis of
statistics and interviews with 4200 company managers, about 100 of them are Russians.
The best progress in Russia was made in terms of
the country’s employment, as it went up to 13th place from 27th. In 2012 Russia’s unemployment rate stood at 5.5%, while the average figure for the countries ranked by IMD was 8%. Youth unemployment at 13.2% was twice as low as the world
average. However, Russia’s labor market as a whole doesn’t look rosy, as better employment was primarily due to the black economy, while in the legal one the number of people in work slid, as Vedomosti quoted Valery Mironov from the Development Center of the Higher School of Economics.
Among other Russian strong points were a low government debt, low tax on individual's income, stable interest rates, the education level and employee’s qualifications. Exports, the pension system, capital market, bureaucracy, as well as low acceptance of innovation and poor demographic and healthcare indicators were among the country’s drawbacks.
In almost a decade Russia’s ranking remained almost unchanged, as in 2004 the country was in 41st place. Russia's main problem is evident and clear: a low level of economic diversification and strong dependence on commodity prices, Garelli explained.
Though a move upwards in the competitiveness ranking is generally positive, most of Russia’s perspective criteria remains without much progress or declining, agrees Anna Bodrova, an analyst at Investcafe. “To move up the ranking due to macroeconomic indicators isn’t very difficult, but both business regulations and its quality and efficiency remain Russia’s weak spots. … the effect from developing these areas will enable Russia go up the rating another 8-12 points,” Bodrova explained.
‘Competitiveness and austerity: the divorce?’
One of the key issues of the 2013 IMD report is that
competitiveness could hardly be compatible with austerity.
"While the euro zone remains stalled, the robust comeback of the US to the top of the competitiveness rankings, and better news from Japan, have revived the austerity debate,” said Garelli.
“Structural reforms are unavoidable, but growth remains a prerequisite for competitiveness. In addition, the harshness of austerity measures too often antagonizes the population. In the end, countries need to preserve social cohesion to deliver prosperity,” he added.
The need to stimulate growth rather than impose draconian cuts is becoming increasingly recognized by the key policymakers across Europe . But while the need to find a balance between cuts and growth now seems to have become evident, a golden middle remains a tricky thing to find.
“The trouble is that no one knows where this balance lies. We are in uncharted territory now and everyone is feeling their way,” Ben Aris, editor-in-chief at Business New Europe, told Business RT earlier.