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The Global Competitiveness Report 2011–2012 Klaus Schwab, World Economic Forum The Global Competitiveness Report 2011-2012 © 2011 World Economic Forum
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  • 1.The GlobalCompetitiveness Report20112012Klaus Schwab, World Economic ForumThe Global Competitiveness Report 2011-2012 2011 World Economic Forum

2. World Economic ForumGeneva, Switzerland 2011Professor Klaus SchwabWorld Economic ForumEditorThe GlobalCompetitiveness Report20112012Professor Xavier Sala-i-MartinColumbia UniversityChief Advisor of the Centre for Global Competitiveness and Performance The Global Competitiveness Report 2011-2012 2011 World Economic Forum 3. The Global Competitiveness Report 2011 World Economic Forum2012 is published by the World Economic GenevaForum within the framework of the Centre forGlobal Competitiveness and PerformanceCopyright 2011by the World Economic ForumProfessor Klaus SchwabAll rights reserved. No part of this publicationExecutive Chairmanmay be reproduced, stored in a retrieval system,or transmitted, in any form or by any means,Professor Xavier Sala-i-Martinelectronic, mechanical, photocopying, or other- otherChief Advisor of the Centre for Globalwise without the prior permission of the WorldCompetitiveness and PerformanceEconomic Forum.Robert GreenhillISBN-13: 978-92-95044-74-6Chief Business OfficerISBN-10: 92-95044-74-6This book is printed on paper suitable forCENTRE FOR GLOBAL COMPETITIVENESS AND PERFORMANCErecycling and made from fully managed andJennifer Blanke, Senior Director, Leadsustained forest sources.Economist, Head of the Centre for GlobalCompetitiveness and Performance Printed and bound in Switzerland by SRO-Kundig.Beat Bilbao-Osorio, Associate Director,EconomistRoberto Crotti, Junior QuantitativeEconomistMargareta Drzeniek Hanouz, Director,Senior EconomistBrindusa Fidanza, Associate Director,Environmental InitiativesThierry Geiger, Associate Director,EconomistCiara Browne, Associate DirectorPearl Samandari, Community ManagerSatu Kauhanen, CoordinatorWe thank Hope Steele for her superb edit-ing work and Neil Weinberg for his excellentgraphic design and layout. We are grateful toDjemila Zouyene for her invaluable researchassistance.The terms country and nation as used in thisreport do not in all cases refer to a territorialentity that is a state as understood by inter-international law and practice. The terms coverwell-dened, geographically self-containedeconomic areas that may not be states butfor which statistical data are maintained on aseparate and independent basis. The Global Competitiveness Report 2011-2012 2011 World Economic Forum 4. ContentsPartner Institutes vPart 2: Data Presentation 85Prefacexiii 2.1 Country/Economy Profiles87by Klaus Schwab and Robert GreenhillHow to Read the Country/Economy Profiles ................................89List of Countries/Economies .........................................................91Country/Economy Profiles.............................................................92Part I: Measuring Competitiveness12.2 Data Tables 377How to Read the Data Tables .....................................................379Index of Data Tables ...................................................................3811.1 The Global Competitiveness Index 20112012:3Data Tables..................................................................................383Setting the Foundations for Strong Productivityby Xavier Sala-i-Martin, Beat Bilbao-Osorio, Jennifer Blanke,Margareta Drzeniek Hanouz, and Thierry Geiger Technical Notes and Sources 5211.2 The Long-Term View: Developing a Framework for51About the Authors 525Assessing Sustainable Competitivenessby Jennifer Blanke, Roberto Crotti, Margareta Drzeniek Hanouz,Brindusa Fidanza, and Thierry GeigerAcknowledgments 5271.3 The Executive Opinion Survey: An Indispensable75Tool in the Assessment of National Competitivenessby Ciara Browne and Thierry Geiger The Global Competitiveness Report 2011-2012 2011 World Economic Forum 5. The Global Competitiveness Report 2011-2012 2011 World Economic Forum 6. Partner InstitutesPartner InstitutesThe World Economic Forums Centre for Global Bangladesh Centre for Policy Dialogue (CPD)Competitiveness and Performance is pleased to Mustafizur Rahman, Executive Directoracknowledge and thank the following organizationsKhondaker Golam Moazzem, Senior Research Fellowas its valued Partner Institutes, without which theKishore Kumer Basak, Research Associaterealization of The Global Competitiveness Report 2011 Barbados2012 would not have been feasible: Arthur Lewis Institute for Social and Economic Studies, University of West Indies (UWI)AlbaniaAndrew Downes, DirectorInstitute for Contemporary Studies (ISB)Artan Hoxha, President BelgiumElira Jorgoni, Senior Expert and Project Manager Vlerick Leuven Gent Management SchoolDenalada Kuzumi, ResearcherPriscilla Boairdi, Associate, Competence Centre Entrepreneurship, Governance and StrategyAlgeriaWim Moesen, ProfessorCentre de Recherche en Economie Applique pour leLeo Sleuwaegen, Professor, Competence CentreDveloppement (CREAD)Entrepreneurship, Governance and StrategyYoucef Benabdallah, Assistant ProfessorYassine Ferfera, DirectorBenin CAPODConception et Analyse de Politiques deAngola DveloppementMITC Investimentos Epiphane Adjovi, DirectorvEstefania Jover, Senior AdviserMaria-Odile Attanasso, Deputy CoordinatorSouth Africa-Angola Chamber of Commerce (SA-ACC) Fructueux Deguenonvo, ResearcherRoger Ballard-Tremeer, Hon Chief Executive Bosnia and HerzegovinaArgentinaMIT Center, School of Economics and Business in Sarajevo,IAEUniversidad AustralUniversity of SarajevoCristian Alonso, Project Manager Zlatko Lagumdzija, ProfessorEduardo Luis Fracchia, Professor Zeljko Sain, Executive Director Jasmina Selimovic, Assistant DirectorArmeniaEconomy and Values Research Center BotswanaManuk Hergnyan, Chairman Botswana National Productivity CentreSevak Hovhannisyan, Board Member and Senior AssociateLetsogile Batsetswe, Research Consultant and StatisticianGohar Malumyan, Research Associate Parmod Chandna, Acting Executive Director Phumzile Thobokwe, Manager, Information and ResearchAustraliaServices DepartmentAustralian Industry GroupCarola Lehmer, Senior Research Coordinator BrazilHeather Ridout, Chief ExecutiveFundao Dom CabralNikki Wilson, Administrative Assistant Marina Arajo, Economist and Researcher, The Competitiveness and Innovation CenterAustriaCarlos Arruda, Executive Director, International AdvisoryAustrian Institute of Economic Research (WIFO) Council and Professor, The Competitiveness andKarl Aiginger, DirectorInnovation CenterGerhard Schwarz, Coordinator, Survey DepartmentFabiana Madsen, Economist and Researcher, TheAzerbaijan Competitiveness and Innovation CenterAzerbaijan Marketing Society Movimento Brasil Competitivo (MBC)Fuad Aliyev, Project Manager Erik Camarano, Director PresidentAshraf Hajiyev, Consultant Nikelma Moura, Communications Assistant Tatiana Ribeiro, Project CoordinatorBahrainBahrain Competitiveness Council, Bahrain EconomicBrunei DarussalamDevelopment BoardMinistry of Industry and Primary ResourcesNada Azmi, Manager, Economic Planning and DevelopmentPehin Dato Yahya Bakar, MinisterMohammed bin Essa Al-Khalifa, Chief ExecutiveDato Dr Amin Abdullah, Permanent SecretaryMaryam Matter, Coordinator, Economic Planning andDevelopmentBulgaria Center for Economic Development Anelia Damianova, Senior Expert The Global Competitiveness Report 2011-2012 2011 World Economic Forum 7. Partner Institutes Burkina Faso Croatia lnstitut Suprieure des Sciences de la Population (ISSP),National Competitiveness Council University of OuagadougouJadranka Gable, Project Administrator Samuel Kabore, Economist and Head of Development Kresimir Jurlin, Research Associate Strategy and Population Research Mira Lenardic, Senior Advisor BurundiCyprus University Research Centre for Economic and Social Cyprus College Research Center Development (CURDES), National University of Burundi Bambos Papageorgiou, Head of Socioeconomic and Banderembako Deo, Director Academic Research Gilbert Niyongabo, Dean, Faculty of Economics &cdbbankThe Cyprus Development Bank ManagementMaria Markidou-Georgiadou, Manager, International Business Cambodia Banking Economic Institute of CambodiaCzech Republic Sok Hach, PresidentCMC Graduate School of Business Seiha Neou, Research ManagerTomas Janca, Executive Director Sokheng Sam, ResearcherDenmark CameroonInnoption EMEA ApS Comit de Comptitivit (Competitiveness Committee)Carsten Snedker, Managing Partner Lucien Sanzouango, Permanent SecretaryEcuador CanadaESPAE Graduate School of Management, Escuela Superior The Conference Board of Canada Politcnica del Litoral (ESPOL) Michael R. Bloom, Vice-President, OrganizationalElizabeth Arteaga, Project Assistant Effectiveness & LearningVirginia Lasio, Director Anne Golden, President and Chief Executive OfficerSara Wong, Professor P. Derek Hughes, Senior Research AssociateEgypt Cape VerdeThe Egyptian Center for Economic Studies INOVE RESEARCHInvestigao e Desenvolvimento, LdaIman Al-Ayouty, Senior Economist Sara Mendes, Senior ResearcherOmneia Helmy, Deputy Director of Research and Lead Jlio Delgado, Partner and Senior ResearcherEconomist Frantz Tavares, Partner and Chief Executive OfficerMagda Kandil, Executive Director and Director of Researchvi ChadEstonia Groupe de Recherches Alternatives et de Monitoring duEstonian Institute of Economic Research Projet Ptrole-Tchad-Cameroun (GRAMP-TC)Evelin Ahermaa, Head of Economic Research Sector Antoine Doudjidingao, ResearcherMarje Josing, Director Gilbert Maoundonodji, Director Celine Nnodji Mbaipeur, Programme Officer Estonian Development FundKitty Kubo, Head of Foresight ChileOtt Prna, Chief Executive Officer Universidad Adolfo Ibez Fernando Larrain Aninat, Director of the Master in Ethiopia Management and Public Policy, School of Government African Institute of Management, Development and Camila Chadwick, Project Coordinator Governance Leonidas Montes, Dean, School of GovernmentTegegne Teka, General Manager ChinaFinland Institute of Economic System and ManagementETLAThe Research Institute of the Finnish Economy National Development and Reform Commission Petri Rouvinen, Research Director Zhou Haichun, Deputy Director and ProfessorMarkku Kotilainen, Research Director Chen Wei, Research FellowPekka Yl-Anttila, Managing Director Dong Ying, ProfessorFrance China Center for Economic Statistics Research, HEC School of Management, Paris Tianjin University of Finance and EconomicsBertrand Moingeon, Professor and Deputy Dean Lu Dong, Professor Bernard Ramanantsoa, Professor and Dean Hongye Xiao, ProfessorGambia, The Bojuan Zhao, ProfessorGambia Economic and Social Development Research Institute Huazhang Zheng, Associate Professor (GESDRI) Colombia Makaireh A. Njie, Director National Planning DepartmentGeorgia Alvaro Edgar Balcazar, Entrepreneurial Development DirectorBusiness Initiative for Reforms in Georgia Hernando Jos Gmez, General DirectorTamara Janashia, Executive Director Nelson Fabin Villareal Rincn, AdvisorGiga Makharadze, Founding Member of the Board of Colombian Council of Competitiveness Directors Rosario Crdoba, President Mamuka Tsereteli, Founding Member of the Board ofDirectors Cte dIvoire Chambre de Commerce et dIndustrie de Cte dIvoire Jean-Louis Billon, President Jean-Louis Giacometti, Technical Advisor to the President Mamadou Sarr, Director General The Global Competitiveness Report 2011-2012 2011 World Economic Forum 8. Partner InstitutesGermany IrelandIW Consult GmbH, Cologne Institute for Economic ResearchCompetitiveness Survey Group, Department of Economics,Adriana Sonia Neligan, Head of DepartmentUniversity College CorkEleanor Doyle, Professor, Department of EconomicsWHUOtto Beisheim School of Management, VallendarNiall OSullivanRalf Fendel, Professor of Monetary EconomicsBernadette PowerMichael Frenkel, Professor, Chair of Macroeconomics andInternational Economics National Competitiveness CouncilAdrian Devitt, ManagerGhanaMichelle Nic Gearailt, Assistant EconomistAssociation of Ghana Industries (AGI)Patricia Djorbuah, Projects Officer IsraelCletus Kosiba, Executive Director Manufacturers Association of Israel (MAI)Nana Owusu-Afari, President Shraga Brosh, PresidentDan Catarivas, DirectorGreeceAmir Hayek, Managing DirectorSEV Hellenic Federation of EnterprisesMichael Mitsopoulos, Coordinator, Research and Analysis ItalyThanasis Printsipas, Economist, Research and Analysis SDA Bocconi School of ManagementSecchi Carlo, Full Professor of Economic Policy, BocconiGuatemala UniversityFUNDESAPaola Dubini, Associate Professor, Bocconi UniversityEdgar A. Heinemann, President of the Board of DirectorsFrancesco A. Saviozzi, SDA Assistant Professor,Pablo Schneider, Economic Director Strategic and Entrepreneurial Management DepartmentJuan Carlos Zapata, General ManagerJamaicaGuyanaMona School of Business (MSB), The University of the WestInstitute of Development Studies, University of GuyanaIndiesKaren Pratt, Research AssociatePatricia Douce, Project AdministratorClive Thomas, DirectorEvan Duggan, Executive Director and ProfessorHaiti William Lawrence, Director, Professional Services UnitPrivate Sector Economic ForumJapanEdouard Baussan, Deputy CoordinatorKeio University in cooperation with Keizai Doyukai KeizaiReginald Boulos, Coordinator(Japan Association of Corporate Executives)Bernard Craan, Secretary GeneralYoko Ishikura, Professor,Graduate School of Media Design,Keio University viiHong Kong SARHong Kong General Chamber of Commerce Kiyohiko Ito, Managing Director, Keizai DoyukaiDavid ORear, Chief Economist Heizo Takenaka, Director, Global Security Research Institute,Keio UniversityFederation of Hong Kong IndustriesAlexandra Poon, DirectorJordanMinistry of Planning & International CooperationThe Chinese General Chamber of CommerceJordan National Competitiveness TeamHungary Mukhallad Omari, Director of Policies and StudiesKOPINT-TRKI Economic Research Ltd. DepartmentPeter Vakhal,, Project ManagerAktham Al-Zubi, Senior Researcherva Palcz, Chief Executive Officer Kawther Al-Zoubi, Head of Competitiveness DivisionIceland KazakhstanInnovation Center Iceland JSC National Analytical Centre of the Government of theKarl Fridriksson, Managing Director of Human Resources andRepublic of KazakhstanMarketing Takhir Aslyaliyev, Project ManagerArdis Armannsdottir, Marketing ManagerAyana Manasova, ChairpersonThorsteinn I. Sigfusson, Director Alikhan Yerzhanov, Expert AnalystIndia KenyaConfederation of Indian Industry (CII)Institute for Development Studies, University of NairobiChandrajit Banerjee, Director General Mohamud Jama, Director and Associate ProfessorMarut Sengupta, Deputy Director General Paul Kamau, Senior Research FellowGantakolla Srivastava, Head, Financial Services Dorothy McCormick, Research ProfessorIndonesia Korea, Republic ofCenter for Industry, SME & Business Competition Studies,College of Business School, Korea Advanced Institute ofUniversity of TrisaktiScience and Technology KAISTTulus Tambunan, Professor and DirectorIngoo Han, Senior Associate Dean and ProfessorByungtae Lee, Acting DeanIran, Islamic Republic ofProfessor Kayla Jisoo Lee, Manager, Exchange ProgrammeThe Centre for Economic Studies and Surveys (CESS), Iran Chamber of Commerce, Industries and MinesKorea Development InstituteHammed Roohani, DirectorJoohee Cho, Senior Research AssociateYongsoo Lee, Head, Policy Survey UnitThe Global Competitiveness Report 2011-2012 2011 World Economic Forum 9. Partner InstitutesKuwait MauritaniaKuwait National Competitiveness CommitteeCentre dInformation Mauritanien pour le DveloppementAdel Al-Husainan, Committee Member Economique et Technique (CIMDET/CCIAM)Fahed Al-Rashed, Committee ChairmanKhira Mint Cheikhnani, DirectorSayer Al-Sayer, Committee Member L Abdoul, Consultant and Analyst Habib Sy, AnalystKyrgyz RepublicEconomic Policy Institute Bishkek ConsensusMauritiusLola Abduhametova, Program Coordinator Joint Economic Council of MauritiusMarat Tazabekov, ChairmanRaj Makoond, DirectorLatvia Board of InvestmentInstitute of Economics, Latvian Academy of SciencesKevin Bessondyal, Assistant Director, Planning and PolicyHelma Jirgena, DirectorDev Chamroo, Director, Planning and PolicyIrina Curkina, ResearcherRaju Jaddoo, Managing DirectorLebanonMexicoBader Young Entrepreneurs ProgramCenter for Intellectual Capital and CompetitivenessAntoine Abou-Samra, Managing DirectorErika Ruiz Manzur, Executive DirectorHiba Zunji, AssistantRen Villarreal Arrambide, President and Chief Executive OfficerLesothoJess Zurita Gonzlez, General DirectorPrivate Sector Foundation of Lesotho Instituto Mexicano para la Competitividad (IMCO)O.S.M. Moosa, Chaiperson Priscila Garcia, ResearcherTiisetso Sekhonyana, Researcher Manuel Molano, Deputy General DirectorLindiwe Sephomolo, Chief Executive Officer Juan E. Pardinas, General DirectorLithuania Ministry of the EconomyStatistics Lithuania. .Jose Antonio Torre, Undersecretary for Competitiveness andVilija Lapeniene, Director General StandardizationGediminas Samuolis, Head, Knowledge Economy and Special Enrique Perret Erhard, Technical Secretary for Surveys Statistics Division.CompetitivenessOna Grigiene, Deputy Head, Knowledge Economy and Narciso Suarez, Research Director, Secretary for Special Surveys Statistics Division CompetitivenessLuxembourg MoldovaviiiChamber of Commerce of the Grand Duchy of Luxembourg Academy of Economic Studies of Moldova (AESM)Franois-Xavier Borsi, Attach, Economic Department Grigore Belostecinic, RectorCarlo Thelen, Chief Economist, Member of the ManagingBoardCentre for Economic Research (CER)Christel Chatelain, Attache, Economic DepartmentCorneliu Gutu, DirectorMacedonia, FYR MongoliaNational Entrepreneurship and Competitiveness CouncilOpen Society Forum (OSF)(NECC) Munkhsoyol Baatarjav, Manager of Economic PolicyDejan Janevski, Project CoordinatorErdenejargal Perenlei, Executive DirectorZoran Stavreski, President of the Managing Board MontenegroSaso Trajkoski, Executive Director Institute for Strategic Studies and Prognoses (ISSP)Madagascar Maja Drakic, Project ManagerCentre of Economic Studies, University of Antananarivo Petar Ivanovic, Chief Executive OfficerRavelomanana Mamy Raoul, DirectorVeselin Vukotic, PresidentRazato Rarijaona Simon, Executive Secretary MoroccoMalawi Universit Hassan II, LASAAREMalawi Confederation of Chambers of Commerce and Fouzi Mourji, Professor of EconomicsIndustry General Confederation of Moroccan Entreprise (CGEM)Hope Chavula, Public Private Dialogue ManagerMounir Ferram, Delegate DirectorChancellor L. Kaferapanjira, Chief Executive Officer MozambiqueMalaysia EconPolicy Research Group, Lda.Institute of Strategic and International Studies (ISIS)Peter Coughlin, DirectorMahani Zainal Abidin, Chief ExecutiveDonaldo Miguel Soares, ResearcherSteven C.M. Wong, Senior Director, Economics Ema Marta Soares, AssistantMalaysia Productivity Corporation (MPC) NamibiaMohd Razali Hussain, Director General Institute for Public Policy Research (IPPR)Lee Saw Hoon, Senior Director Graham Hopwood, Executive DirectorMali NepalGroupe de Recherche en Economie Applique et Thorique Centre for Economic Development and Administration(GREAT) (CEDA)Massa Coulibaly, Coordinator Ramesh Chandra Chitrakar, Professor and CountryMaltaCoordinatorCompetitive MaltaFoundation for National CompetitivenessBharat Pokharel, Project Director and Executive DirectorMargrith Lutschg-Emmenegger, Vice PresidentMahendra Raj Joshi, MemberAdrian Said, Chief CoordinatorCaroline Sciortino, Research CoordinatorThe Global Competitiveness Report 2011-2012 2011 World Economic Forum 10. Partner InstitutesNetherlandsPuerto RicoINSCOPE: Research for Innovation, Erasmus University Puerto Rico 2000, Inc.RotterdamSuzette M. Jimenez, PresidentFrans A. J. Van den Bosch, Professor Francisco Montalvo Fiol, Project CoordinatorHenk W. Volberda, Director and Professor QatarNew ZealandQatari Businessmen Association (QBA)Business New Zealand Issa Abdul Salam Abu Issa, Secretary-GeneralPhil OReilly, Chief Executive Sarah Abdallah, Deputy General ManagerThe New Zealand InstituteRomaniaCatherine Harland, Project LeaderGroup of Applied Economics (GEA)Rick Boven, Director Liviu Voinea, Executive Director Irina Zgreaban, Program CoordinatorNigeriaNigerian Economic Summit Group (NESG)Russian FederationFrank Nweke Jr., Director GeneralBauman Innovation & Eurasia Competitiveness InstituteChris Okpoko, Associate Director, Research Katerina Marandi, Programme ManagerFoluso Phillips, ChairmanAlexey Prazdnichnykh, Principal and Managing DirectorNorway Stockholm School of Economics, RussiaBI Norwegian School of ManagementIgor Dukeov, Area PrincipalEskil Goldeng, ResearcherCarl F. Fey, Associate Dean of ResearchTorger Reve, Professor RwandaOman Private Sector FederationThe International Research FoundationRoger Munyampenda, Chief Executive OfficerSalem Ben Nasser Al-Ismaily, ChairmanVincent S. Safari, Director, Trade and Policy AdvocacyPublic Authority for Investment Promotion and Export Saudi ArabiaDevelopment (PAIPED) National Competitiveness Center (NCC)Mehdi Ali Juma, Expert for Economic Research Awwad Al-Awwad, President Khaldon Mahasen, Vice PresidentPakistanCompetitiveness Support Fund SenegalMaryam Jawaid, Communication SpecialistCentre de Recherches Economiques Appliques (CREA),Imran Khan, EconomistUniversity of DakarShahab Khawaja, Chief Executive Officer ix Diop Ibrahima Thione, DirectorParaguay SerbiaCentro de Anlisis y Difusin de Economia ParaguayaFoundation for the Advancement of Economics (FREN)(CADEP)Mihail Arandarenko, Chairman of the Board of DirectorsDionisio Borda, Research MemberKatarina Bojie, Project CoordinatorFernando Masi, DirectorBojan Ristic, ResearcherMara Beln Servn, Research Member SingaporePeru Economic Development BoardCentro de Desarrollo Industrial (CDI), Sociedad Nacional Angeline Poh, Director Planningde IndustriasCheng Wai San, Head, Research & Statistics UnitNstor Asto, Project DirectorLuis Tenorio, Executive Director Slovak Republic Business Alliance of Slovakia (PAS)PhilippinesRobert Kicina, Executive DirectorMakati Business Club (MBC)Marc P. Opulencia, Deputy Director SloveniaMichael B. Mundo, Chief EconomistInstitute for Economic ResearchPeter Angelo V. Perfecto, Executive Director Sonja Uric, Senior Researcher Peter Stanovnik, ProfessorIn cooperation with the Management Association ofthe Philippines (MAP)University of Ljubljana, Faculty of EconomicsArnold P. Salvador, Executive Director Mateja Drnovek, Professor Ale Vahcic, ProfessorPolandEconomic Institute, National Bank of PolandSouth AfricaJarosaw T. Jakubik, Deputy Director Business Leadership South AfricaPiotr Boguszewski, Advisor Friede Dowie, Director Michael Spicer, Chief Executive OfficerPortugal Business Unity South AfricaPROFORUM, Associao para o Desenvolvimento da Coenraad Bezuidenhout, Executive Director for Economic Engenharia PolicyIldio Antnio de Ayala Serdio, Vice President of the Board Jerry Vilakazi, Chief Executive Officer of DirectorsFrum de Administradores de Empresas (FAE) SpainPaulo Bandeira, General Director IESE Business School, International Center forPedro do Carmo Costa, Member of the Board of Directors CompetitivenessEsmeralda Dourado, President of the Board of Directors Mara Luisa Blzquez, Research Associate Enrique de Diego, Research Assistant Antoni Subir, Professor The Global Competitiveness Report 2011-2012 2011 World Economic Forum 11. Partner Institutes Sri Lanka Tunisia Institute of Policy Studies Institut Arabe des Chefs dEntreprises Ayodya Galappattige, Research Officer Majdi Hassen, Executive Counsellor Saman Kelegama, Executive DirectorChekib Nouira, President Dilani Hirimuthugodage, Research Officer Turkey Swaziland TUSIAD Sabanci University Competitiveness Forum Federation of Swaziland Employers and Chamber ofIzak Atiyas, Director CommerceSelcuk Karaata, Vice Director Zodwa Mabuza, Chief Executive Officer Uganda Mduduzi Lokotfwako, Research Analyst Kabano Research and Development Centre Nyakwesi Motsa, Administration & Finance Manager Robert Apunyo, Program Manager SwedenDelius Asiimwe, Executive Director International University of Entrepreneurship and Technology Catherine Ssekimpi, Research Associate Niclas Adler, President Ukraine Switzerland CASE Ukraine, Center for Social and Economic Research University of St. Gallen, Executive School of Management, Dmytro Boyarchuk, Executive Director Technology and Law (ES-HSG) Vladimir Dubrovskiy, Leading Economist Beat Bechtold, Communications Manager United Arab Emirates Rubn Rodriguez Startz, Head of Project Abu Dhabi Department of Economic Development Syria H.E. Mohammed Omar Abdulla, Undersecretary Planning and International Cooperation Commission (PICC) Dubai Economic Council Amer Housni Loutfi, Head H.E. Hani Al Hamly, Secretary General Syrian Enterprise and Business Centre (SEBC) Emirates Competitiveness Council Noha Chuck, Chief Executive Officer H.E. Abdulla Nasser Lootah, Secretary General National Competitiveness Observatory (NCO) Institute for Social and Economic Research (ISER), Rami Zaatari, Team Leader Zayed University Taiwan, China Mouawiya Alawad, Director Council for Economic Planning and Development, Executive United Kingdom Yuan LSE Enterprise Ltd, London School of Economics and Liu, Y. Christina, Minister x Hung, J. B., Director, Economic Research Department Political Science Adam Austerfield, Director of Projects Shieh, Chung Chung, Researcher, Economic Research Niccolo Durazzi, Project Officer Department Robyn Klingler Vidra, Researcher Tajikistan Uruguay The Center for Sociological Research Zerkalo Universidad ORT Qahramon Baqoev, Director Isidoro Hodara, Professor Gulnora Beknazarova, Researcher Alikul Isoev, Sociologist and Economist Venezuela CONAPRIVenezuelan Council for Investment Promotion Tanzania Eduardo Porcarelli, Executive Director Research on Poverty Alleviation (REPOA) Litsay Guerrero, Economic Affairs and Investor Services Manager Joseph Semboja, Professor and Executive Director Lucas Katera, Director, Commissioned Research Vietnam Cornel Jahari, Researcher, Commissioned ResearchCentral Institute for Economic Management (CIEM) DepartmentDinh Van An, President Phan Thanh Ha, Deputy Director, Department of Thailand Macroeconomic Management Sasin Graduate Institute of Business Administration, Pham Hoang Ha, Senior Researcher, Department of Chulalongkorn University Macroeconomic Management Pongsak Hoontrakul, Senior Research Fellow Toemsakdi Krishnamra, Director of Sasin Institute for Development Studies in HCMC (HIDS) Piyachart Phiromswad, Faculty of EconomicsNguyen Trong Hoa, Professor and President Du Phuoc Tan, Head of Department Thailand Development Research Institute (TDRI) Trieu Thanh Son, Researcher Somchai Jitsuchon, Research Director Chalongphob Sussangkarn, Distinguished Fellow Yemen Yos Vajragupta, Senior Researcher Yemeni Businessmen Club YBC Ahmed Abu Bakr Bazara, Chairman Timor-Leste Ali Saeed Mahmoud Al-Azaki, Executive Director East Timor Development Agency (ETDA) Margret Arning, Consultant Jose Barreto Goncalves, Survey Supervisor Januario Mok, Survey Field OfficerZambia Palmira Pires, Director Institute of Economic and Social Research (INESOR), University of Zambia Trinidad and Tobago Patricia Funjika, Research Fellow Arthur Lok Jack Graduate School of Business Jolly Kamwanga, Senior Research Fellow and Project Miguel Carillo, Executive Director Coordinator Harrylal Nirmala, Director, International Centre Mubiana Macwangi, Director and Professor The Competitiveness Company Zimbabwe Rolph Balgobin, Chairman Graduate School of Management, University of Zimbabwe A. M. Hawkins, ProfessorThe Global Competitiveness Report 2011-2012 2011 World Economic Forum 12. Partner InstitutesBelize, Bolivia, Costa Rica, Dominican Republic, Ecuador,El Salvador, Honduras, Nicaragua, PanamaINCAE Business School, Latin American Center forCompetitiveness and Sustainable Development (CLACDS)Arturo Condo, RectorLawrence Pratt, Director, CLACDSMarlene de Estrella, Director of External RelationsVctor Umaa, Researcher and Project Manager, CLACDSLatvia, LithuaniaStockholm School of Economics in RigaKarlis Kreslins, Executive MBA Programme DirectorAnders Paalzow, Rectorxi The Global Competitiveness Report 2011-2012 2011 World Economic Forum 13. The Global Competitiveness Report 2011-2012 2011 World Economic Forum 14. PrefacePrefaceKLAUS SCHWAB, Executive Chairman, World Economic ForumROBERT GREENHILL, Chief Business Officer, World Economic ForumThe Global Competitiveness Report 20112012 comes out quality growth in its various activities. In this context,amid multiple challenges to the global economy. After a the Forums Centre for Global Competitiveness andnumber of difficult years, a recovery from the economic Performance has begun to explore which factors arecrisis is tentatively emerging, although it has been very necessary to ensure that national competitivenessunequally distributed: much of the developing world isremains sustainable over the longer term. To this end,still seeing relatively strong growth, despite some risk of Chapter 1.2 of this Report presents our preliminaryoverheating, while most advanced economies continue thoughts on how to understand and measure qualityto experience sluggish recovery, persistent unemploy- growth through a competitiveness lens by definingment, and financial vulnerability, with no clear horizonsustainable competitiveness in economic, social, andfor improvement. In addition, rising commodity prices environmental terms. Issues of quality growth andare eroding the purchasing power of consumers and are sustainable competitiveness represent important areas forlikely to slow the pace of recovery. Such uncertainties the World Economic Forums research going forward.are being exacerbated by growing concerns about theThis years Report features a record number of 142sustainability of public debt amidst the slow growth of economies, and thus continues to be the most com-some advanced economies. The damage that would be prehensive assessment of its kind. It contains a detailedwrought by the first sovereign defaults among advancedprofile for each of the economies featured in the studyeconomies since the 1940s is impossible to gauge, as well as an extensive section of data tables with globalxiiialthough the mere possibility of this eventuality has rankings covering over 100 indicators. This Reportalready hit investor confidence, put the very viability remains the flagship publication within the Forumsof the euro into question, and further undermined the Centre for Global Competitiveness and Performance,US dollars value and its place as the worlds preferredwhich produces a number of research studies that mir-reserve currency. ror the increased integration and complexity of the Policymakers are struggling to find ways to manage world economy.the present economic challenges while preparing theirThe Global Competitiveness Report 20112012 couldeconomies to perform well in an increasingly complexnot have been put together without the thought lead-global landscape. Given the extensive and necessary ership of Professor Xavier Sala-i-Martin at Columbiashort-term efforts related to addressing the most pressingUniversity, who has provided ongoing intellectualfiscal concerns, it remains critical for countries to estab-support for our competitiveness research. We are alsolish the fundamentals underpinning economic growthgrateful to the members of our Advisory Board onand development for the longer term. The WorldCompetitiveness and Sustainability, who have providedEconomic Forum has, for more than three decades,their valuable time and knowledge to help us developplayed a facilitating role in this process by providing de- the preliminary framework on sustainability and com-tailed assessments of the productive potential of nations petitiveness presented in this Report: James Cameron,worldwide. The Report contributes to the understandingFounder and Vice-Chairman, Climate Change Capital;of the key factors determining economic growth, helps Dan Esty, Commissioner, Connecticut Departmentto explain why some countries are more successful thanof Energy and Environmental Protection; Edwinothers in raising income levels and opportunities for J. Feulner Jr, President, The Heritage Foundation;their respective populations, and offers policymakers and Clment Gignac, Minister of Economic Development,business leaders an important tool in the formulation ofInnovation and Export Trade of Quebec, Canada; Jeniimproved economic policies and institutional reforms. Klugman, Director, Gender and Development, World The complexity of todays global economicBank; Hans-Juergen Matern, Vice-President, Head ofenvironment has made it more important than ever to Strategic Quality Management, METRO GROUP;recognize and encourage the qualitative as well as theJohn McArthur, Chief Executive Officer and Executivequantitative aspects of growth, integrating such concepts Director, Millennium Promise; Kevin X. Murphy,as inclusiveness and environmental sustainability toPresident and Chief Executive Officer, J.E. Austinprovide a fuller picture of what is needed and what Associates; Mari Elka Pangestu, Minister of Tradeworks. Indeed, the Forum is focusing increasingly onof Indonesia; Luis Guillermo Plata, Chief ExecutiveThe Global Competitiveness Report 2011-2012 2011 World Economic Forum 15. Preface Officer, The Cornerstone Group; Mark Spelman, Global Head, Strategy, Accenture; and Simon Zadek, Senior Visiting Fellow, Global Green Growth Institute (GGGI).Appreciation also goes to Jennifer Blanke, Head of the Centre for Global Competitiveness and Performance, as well as competitiveness team mem- bers Beat Bilbao-Osorio, Ciara Browne, Roberto Crotti, Margareta Drzeniek Hanouz, Thierry Geiger, and Satu Kauhanen. We thank FedEx and the Africa Commission, our partners in this Report, for their sup- port in this important publication. In addition, this Report would have not been possible without the com- mitment and enthusiasm of our network of over 150 Partner Institutes worldwide. The Partner Institutes are instrumental in carrying out the Executive Opinion Survey that provides the foundation data of this Report as well as imparting the results of the Report at the national level. Finally, we would like to convey our sincere gratitude to all the business executives around the world who took the time to participate in our Executive Opinion Survey.xiv The Global Competitiveness Report 2011-2012 2011 World Economic Forum 16. Part 1Measuring Competitiveness The Global Competitiveness Report 2011-2012 2011 World Economic Forum 17. The Global Competitiveness Report 2011-2012 2011 World Economic Forum 18. 1.1: The Global Competitiveness Index 20112012CHAPTER 1.1 The Global Competitiveness Report 20112012 is coming out at a time of re-emerging uncertainty in the globalThe Global Competitiveness economy. At the beginning of the year, worldwide recovery appeared fairly certain, with economic growthIndex 20112012: Setting for 2011 and 2012 projected by the International Monetary Fund (IMF) at 4.3 percent and 4.5 percent,the Foundations for Strong respectively. However, the middle of the year saw uncertainties regarding the future economic outlookProductivity re-emerge, as growth figures for many economies had to be adjusted downward and the political wrangling inXAVIER SALA-I-MARTIN the United States and Europe undermined confidenceBEAT BILBAO-OSORIOin the ability of governments to take the necessary stepsJENNIFER BLANKEto restore growth. Recent developments reinforce the observationMARGARETA DRZENIEK HANOUZ that economic growth is unequally distributed andTHIERRY GEIGER highlight the shift of balance of economic activity. OnWorld Economic Forum the one hand, emerging markets and developing econo- mies, particularly in Asia, have seen relatively strong economic growthestimated at 6.6 and 6.4 percent for 2011 and 2012, respectively, and attracting increasing financial flows. On the other hand, the United States, Japan, and Europe are experiencing slow and deceler- ating growth with persistent high unemployment and continued financial vulnerability, particularly in some European economies. GDP growth rates for advanced economies in 2011 are expected to remain at levels that, 3 for most countries, are not strong enough to reduce the unemployment built up during the recession. In this context, policymakers across all regions are facing difficult economic management challenges. After closing the output gap and reducing the excess capacity generated during the crisis, emerging and developing countries are benefitting from buoyant internal demand, although they are now facing inflationary pressures caused by rising commodity prices. In advanced economies, the devastating earthquake in Japan and doubts about the sustainability of public debt in Europe, the United States, and Japanissues that could further burden the still-fragile banking sectors in these countriesare undermining investor and business confidence and casting a shadow of uncertainty over the short-term economic outlook. Particularly worrisome is the situ- ation in some peripheral economies of the euro zone, wherein spite of the adoption of recovery plans high public deficit and debt levels, coupled with anemic growth, have led to an increased vulnerability of the economy and much distress in financial markets, as fears of default continue to spread. This complex situation in turn encumbers the fiscal consolidation that will reduce debt burdens to the more manageable levels necessary to support longer-term economic performance. Meeting the economic policy challenges resulting from this two-speed recovery requires not losing sight of long-term competitiveness fundamentals amid nu- merous short-term political pressures in industrialized and emerging economies alike. Many of the current difficulties experienced by advanced economies, notably The Global Competitiveness Report 2011-2012 2011 World Economic Forum 19. 1.1: The Global Competitiveness Index 20112012in the peripheral euro zone, are closely related to training, technological progress, macroeconomic stabil-modest competitiveness performances that limit long-ity, good governance, firm sophistication, and marketterm productivity growth. Efforts to stabilize fiscal efficiency, among others. While all of these factors arepositions and reduce debt burdens must therefore be likely to be important for competitiveness and growth,complemented by competitiveness-enhancing reforms they are not mutually exclusivetwo or more of themaimed at improving the potential for growth in thecan be significant at the same time, and in fact that ismedium-to-longer run. In emerging markets, high what has been shown in the economic literature.3growth rates provide a propitious environment for This open-endedness is captured within the GCI byenhancing competitiveness through structural reformsincluding a weighted average of many different compo-and growth-enhancing investments in order to make nents, each measuring a different aspect of competitive-economic development more sustainable. Competitiveness. These components are grouped into 12 pillars ofeconomies have in place elements driving the produc-competitiveness:tivity enhancements that support high incomes and that,at the same time, ensure that the mechanisms enabling First pillar: Institutionssolid economic performance going into the future are in The institutional environment is determined by the legalposition. and administrative framework within which individuals,For more than three decades, the World Economic firms, and governments interact to generate wealth. TheForums annual Global Competitiveness Reports have stud-importance of a sound and fair institutional environ-ied and benchmarked the many factors underpinning ment became even more apparent during the economicnational competitiveness. From the onset, the goal hascrisis and is especially important for solidifying the fragilebeen to provide insight and stimulate discussion amongrecovery given the increasing role played by the state atall stakeholders on the best strategies and policies to the international level and for the economies of manyovercome the obstacles to improved competitiveness. countries.In the current challenging economic environment, ourThe quality of institutions has a strong bearing onwork is a critical reminder of the importance of taking competitiveness and growth.4 It influences investment 4into account the consequences of our present actions on decisions and the organization of production and playsfuture prosperity based on sustained growth.a key role in the ways in which societies distribute theSince 2005, the World Economic Forum has based itsbenefits and bear the costs of development strategiescompetitiveness analysis on the Global Competitivenessand policies. For example, owners of land, corporateIndex (GCI), a comprehensive tool that measures the shares, or intellectual property are unwilling to invest inmicroeconomic and macroeconomic foundations ofthe improvement and upkeep of their property if theirnational competitiveness.1rights as owners are not protected.5We define competitiveness as the set of institutions, The role of institutions goes beyond the legalpolicies, and factors that determine the level of productivity of a framework. Government attitudes toward markets andcountry. The level of productivity, in turn, sets the level freedoms and the efficiency of its operations are alsoof prosperity that can be earned by an economy. The very important: excessive bureaucracy and red tape,6productivity level also determines the rates of returnoverregulation, corruption, dishonesty in dealing withobtained by investments in an economy, which in turnpublic contracts, lack of transparency and trustworthi-are the fundamental drivers of its growth rates. In other ness, and political dependence of the judicial systemwords, a more competitive economy is one that is likely impose significant economic costs to businesses andto grow faster over time. slow the process of economic development.The concept of competitiveness thus involves static In addition, the proper management of publicand dynamic components: although the productivity offinances is also critical to ensuring trust in the nationala country determines its ability to sustain a high level of business environment. Indicators capturing the qual-income, it is also one of the central determinants of its ity of government management of public finances arereturns to investment, which is one of the key factorstherefore included here to complement the measures ofexplaining an economys growth potential. macroeconomic stability captured in pillar 3 below.Although the economic literature has focusedThe 12 pillars of competitiveness mainly on public institutions, private institutions are alsoThere are many determinants driving productivity andan important element in the process of creating wealth.competitiveness. Understanding the factors behind thisThe recent global financial crisis, along with numerousprocess has occupied the minds of economists for hun- corporate scandals, have highlighted the relevance ofdreds of years, engendering theories ranging from Adamaccounting and reporting standards and transparency forSmiths focus on specialization and the division of labor preventing fraud and mismanagement, ensuring goodto neoclassical economists emphasis on investment in governance, and maintaining investor and consumerphysical capital and infrastructure,2 and, more recently, confidence. An economy is well served by businessesto interest in other mechanisms such as education and that are run honestly, where managers abide by strong The Global Competitiveness Report 2011-2012 2011 World Economic Forum 20. 1.1: The Global Competitiveness Index 20112012ethical practices in their dealings with the government, indebtedness on competitiveness, a topic of particularother firms, and the public at large.7 Private-sectorrelevance given the growing concerns about the poten-transparency is indispensable to business, and can betial sovereign defaults in Europe, Japan, and the Unitedbrought about through the use of standards as well asStates, which, if not prevented, could endanger the still-auditing and accounting practices that ensure access tofragile recovery worldwide.information in a timely manner.8 It is important to note that this pillar evaluates the stability of the macroeconomic environment, so it doesSecond pillar: Infrastructurenot directly take into account the way in which publicExtensive and efficient infrastructure is critical for en- accounts are managed by the government. This quali-suring the effective functioning of the economy, as it tative dimension is captured in the institutions pillaris an important factor determining the location of eco-described above.nomic activity and the kinds of activities or sectors thatcan develop in a particular instance. Well-developed Fourth pillar: Health and primary educationinfrastructure reduces the effect of distance between re-A healthy workforce is vital to a countrys competi-gions, integrating the national market and connecting it tiveness and productivity. Workers who are ill cannotat low cost to markets in other countries and regions. Infunction to their potential and will be less productive.addition, the quality and extensiveness of infrastructurePoor health leads to significant costs to business, as sicknetworks significantly impact economic growth andworkers are often absent or operate at lower levels ofreduce income inequalities and poverty in a variety of efficiency. Investment in the provision of health servicesways.9 A well-developed transport and communications is thus critical for clear economic, as well as moral,infrastructure network is a prerequisite for the access of considerations.11less-developed communities to core economic activities In addition to health, this pillar takes into accountand services.the quantity and quality of the basic education receivedEffective modes of transport, including qualityby the population, which is increasingly important inroads, railroads, ports, and air transport, enable entre-todays economy. Basic education increases the effi-preneurs to get their goods and services to market in aciency of each individual worker. Moreover, workers5secure and timely manner and facilitate the movement who have received little formal education can carry outof workers to the most suitable jobs. Economies also only simple manual tasks and find it much more dif- difdepend on electricity supplies that are free of interrup-ficult to adapt to more advanced production processestions and shortages so that businesses and factories can and techniques. Lack of basic education can thereforework unimpeded. Finally, a solid and extensive tele- become a constraint on business development, withcommunications network allows for a rapid and free firms finding it difficult to move up the value chainflow of information, which increases overall economicby producing more sophisticated or value-intensiveefficiency by helping to ensure that businesses can com- products.municate and decisions are made by economic actors For the longer term, it will be essential to avoidtaking into account all available relevant information.significant reductions in resource allocation to these critical areas, in spite of the fact that many governmentThird pillar: Macroeconomic environmentbudgets will need to be cut to reduce the fiscal burdenThe stability of the macroeconomic environment isbuilt up over the past years.important for business and, therefore, is important forthe overall competitiveness of a country.10 Although Fifth pillar: Higher education and trainingit is certainly true that macroeconomic stability aloneQuality higher education and training is crucial forcannot increase the productivity of a nation, it is also economies that want to move up the value chainrecognized that macroeconomic disarray harms the beyond simple production processes and products.12 Ineconomy, as we have seen recently. The governmentparticular, todays globalizing economy requires coun-cannot provide services efficiently if it has to maketries to nurture pools of well-educated workers who arehigh-interest payments on its past debts. Running fiscal able to adapt rapidly to their changing environment anddeficits limits the governments future ability to react tothe evolving needs of the production system. This pillarbusiness cycles. Firms cannot operate efficiently when measures secondary and tertiary enrollment rates as wellinflation rates are out of hand. In sum, the economy as the quality of education as evaluated by the businesscannot grow in a sustainable manner unless the macro community. The extent of staff training is also takenenvironment is stable. Macroeconomic stability has into consideration because of the importance of voca-captured the attention of the public most recently whentional and continuous on-the-job trainingwhich issome European countries needed the support of theneglected in many economiesfor ensuring a constantIMF and other euro zone countries to prevent sover-upgrading of workers skills.eign default, as their public debt reached unsustainablelevels. Box 1 discusses the potential impact of high The Global Competitiveness Report 2011-2012 2011 World Economic Forum 21. 1.1: The Global Competitiveness Index 20112012Box 1: The link between public debt and competitivenessThe average of public debt as a percentage of GDP for the G-7fiscal consolidation is required. Reducing public debt to pre-countries crossed the 100 percent mark in 2010 (see Table 1 forcrisis levels will constrain government expenditures for at leastdetails). Indeed, for the first time in 60 years, some advanceda decade.2economies face the threat of sovereign default. Interventions to Public spending cuts may have an adverse effect onavoid default in some countries in peripheral Europe, as well as competitiveness, especially if investments in growth-enhancingpolitical brinkmanship over the debt ceiling in the United Statesareas are affected. There is no doubt that reducing publicand the ensuing downgrade of the US credit rating by Standardinvestments for health, education, research and development& Poors, have raised questions about the sustainability of debt (R&D), or the upkeep of infrastructure will erode competitive- competitive-in a number of countries. These questions are particularly acute ness over the medium to longer term. R&D and education espe-espe-in the concerned euro zone economies, where a combinationcially are among the areas that matter most for the competi-competi-of low competitiveness and a cautious growth outlook calls the tiveness of advanced economies. Investments in these areasability of governments to repay their debt into question.should therefore be preserved as much as possible.In the short term, sovereign defaults in advanced econo- econo-Although it is still too early to judge the effects of the pres-pres-mies could push the world into recession, notably by trigger- trigger-ent debt crisis on different categories of public expenditure,ing another wave of failures of still-fragile banking systems. a recent survey in European countries shows that, over theFurther, higher public debt levels generally bring about highernext years, fiscal pressures may lead to a reduction of R&Dinterest rates across the economy, which in turn raise the costinvestment in only four EU countries out of eighteen that wereof finance for businesses, crowding out the private investment surveyed, while nine countries plan to increase public spend- spend-that is so crucial for growth. Moreover, as public debt levels ing in this category.3 In the United States, however, althoughrise, governments are under pressure to raise taxes, which may overall government spending rose between 2007 and 2009, thebe distortive or can further stifle business activity. share spent on education declined from 16.8 to 15.8 percent of the total.4Table 1: Public debt levels in G-7 economies Given the importance of public investment in the com- com-Country Public debt as percent of GDPpetitiveness-enhancing areas such as education or innovationJapan220.3 for future competitiveness, policymakers must measure very 6Italy119.0 carefully the effects of reducing such investments, as this mayUnited States 91.6 endanger future growth and prosperity. This would have theFrance84.3Canada84.0 unfortunate effect of converting short-term financial difficultiesGermany 80.0 into longer-term competitiveness weaknesses. PolicymakersUnited Kingdom77.2 should therefore focus on measures to enhance competitive- competitive-Average101.3 ness that would strengthen their countries growth potential and thus improve the budgetary situation. In peripheral European In addition to these relatively short-term effects, high economies that have accumulated debt over the past yearspublic debt can impact competitiveness and the future growth while their competitiveness has not improved, competitiveness-performance of an economy in the longer term. In general, enhancing reforms would support economic growth and thusthe impact of public debt on competitiveness depends to a create a virtuous cycle that could make high debt burdens morelarge extent on how it is spent. The accrual of public debt can sustainable.enhance competitiveness if it is used to finance investmentsthat raise productivity, such as upgrading schools or supportingresearch. However, if debt is used to finance present consump-consump- Notestion, it burdens the economy in the long run with little tangible 1 OECD Economic Outlook, May 2011.Outlook,benefit. Indeed, in addition to crowding out private investment,2 For example, by one estimate public indebtedness inwhich may also reduce growth, higher debt implies that interest OECD countries can be reduced to its 2007 level by 2023payments and debt service will take up a bigger share of theonly provided that no new debt is created after 2014, andthat growth rates of 4 percent annually are achieved. Seegovernment budget, forcing a reduction in public spending inBofinger 2011.other areas.3 European Commission 2011. In OECD countries, where public debt is expected to riseon average from 73 percent of GDP in 2007 to over 100 percent 4 However, the absolute public spending on educationincreased. See OECD.stat, Dataset 11: Governmentin 2012, governments interest payments will grow from 1.7 to spending by function. Available at http://stats.oecd.org/2.2 percent of GDP.1 A consensus is emerging that the present Index.aspx (retrieved on August 12, 2011).levels of debt in many advanced economies are so high thatThe Global Competitiveness Report 2011-2012 2011 World Economic Forum 22. 1.1: The Global Competitiveness Index 20112012Sixth pillar: Goods market efficiencyallocates the resources saved by a nations citizens, asCountries with efficient goods markets are well posi-well as those entering the economy from abroad, totioned to produce the right mix of products and services their most productive uses. It channels resources togiven their particular supply-and-demand conditions, asthose entrepreneurial or investment projects with thewell as to ensure that these goods can be most effectively highest expected rates of return rather than to the po-traded in the economy. Healthy market competition, litically connected. A thorough and proper assessmentboth domestic and foreign, is important in driving of risk is therefore a key ingredient of a sound financialmarket efficiency and thus business productivity bymarket.ensuring that the most efficient firms, producing goodsBusiness investment is also critical to productivity.demanded by the market, are those that thrive. The bestTherefore economies require sophisticated financialpossible environment for the exchange of goods requiresmarkets that can make capital available for private-sectora minimum of impediments to business activity throughinvestment from such sources as loans from a soundgovernment intervention. For example, competitivenessbanking sector, well-regulated securities exchanges,is hindered by distortionary or burdensome taxes and venture capital, and other financial products. In orderby restrictive and discriminatory rules on foreign directto fulfill all those functions, the banking sector needs toinvestment (FDI)limiting foreign ownershipas wellbe trustworthy and transparent, andas has been madeas on international trade. The recent economic crisis hasso clear recentlyfinancial markets need appropriatehighlighted the degree of interdependence of economies regulation to protect investors and other actors in theworldwide and the degree to which growth depends oneconomy at large.open markets. Protectionist measures are counterproduc-tive as they reduce aggregate economic activity. Ninth pillar: Technological readinessMarket efficiency also depends on demand condi-In todays globalized world, technology is increasinglytions such as customer orientation and buyer sophistica- essential for firms to compete and prosper. The techno-tion. For cultural or historical reasons, customers maylogical readiness pillar measures the agility with whichbe more demanding in some countries than in others.an economy adopts existing technologies to enhance theThis can create an important competitive advantage, as itproductivity of its industries, with specific emphasis on 7forces companies to be more innovative and customer- its capacity to fully leverage information and commu-oriented and thus imposes the discipline necessary for nication technologies (ICT) in daily activities and pro-efficiency to be achieved in the market. duction processes for increased efficiency and competi- tiveness.14 ICT has evolved into the general purposeSeventh pillar: Labor market efficiencytechnology of our time,15 given the critical spilloversThe efficiency and flexibility of the labor market are to the other economic sectors and their role as industry-critical for ensuring that workers are allocated to theirwide enabling infrastructure. Therefore ICT access andmost efficient use in the economy and provided withusage are key enablers of countries overall technologi-incentives to give their best effort in their jobs. Laborcal readiness.markets must therefore have the flexibility to shift Whether the technology used has or has not beenworkers from one economic activity to another rapidlydeveloped within national borders is irrelevant for itsand at low cost, and to allow for wage fluctuationsability to enhance productivity. The central point is thatwithout much social disruption.13 The importance ofthe firms operating in the country need to have accessthe latter has been dramatically highlighted by the re-to advanced products and blueprints and the ability tocent events in Arab countries, where high youth un-use them. Among the main sources of foreign technol-employment sparked social unrest in Tunisia that spreadogy, FDI often plays a key role. It is important to noteacross the region. that, in this context, the level of technology availableEfficient labor markets must also ensure a clear to firms in a country needs to be distinguished from therelationship between worker incentives and their ef- efcountrys ability to innovate and expand the frontiersforts to promote meritocracy at the workplace, and of knowledge. That is why we separate technologicalthey must provide equity in the business environment readiness from innovation, captured in the 12th pillar,between women and men. Taken together these factorsdescribed below.have a positive effect on worker performance and theattractiveness of the country for talent, two aspects that Tenth pillar: Market sizeare growing more important as talent shortages loom on The size of the market affects productivity since largethe horizon. markets allow firms to exploit economies of scale. Traditionally, the markets available to firms have beenEighth pillar: Financial market developmentconstrained by national borders. In the era of globaliza-The recent economic crisis has highlighted the central tion, international markets have become a substitute forrole of a sound and well-functioning financial sectordomestic markets, especially for small countries. Therefor economic activities. An efficient financial sector is vast empirical evidence showing that trade openness is The Global Competitiveness Report 2011-2012 2011 World Economic Forum 23. 1.1: The Global Competitiveness Index 20112012positively associated with growth. Even if some recent productivity. Firms in these countries must design andresearch casts doubts on the robustness of this relation-develop cutting-edge products and processes to main-ship, there is a general sense that trade has a positive tain a competitive edge. This progression requires aneffect on growth, especially for countries with smallenvironment that is conducive to innovative activity,domestic markets.16supported by both the public and the private sectors. In Thus exports can be thought of as a substitute forparticular, it means sufficient investment in research anddomestic demand in determining the size of the marketdevelopment (R&D), especially by the private sector;for the firms of a country.17 By including both domestic the presence of high-quality scientific research institu-and foreign markets in our measure of market size, wetions; extensive collaboration in research between uni-give credit to export-driven economies and geographicversities and industry; and the protection of intellectualareas (such as the European Union) that are divided into property. In light of the recent sluggish recovery andmany countries but have a single common market.rising fiscal pressures faced by advanced economies, it is important that public and private sectors resist pressuresEleventh pillar: Business sophistication to cut back on the R&D spending that will be so criti-There is no doubt that sophisticated business practicescal for sustainable growth going into the future.are conducive to higher efficiency in the productionof goods and services. Business sophistication concernsThe interrelation of the 12 pillarstwo elements that are intricately linked: the quality of While we report the results of the 12 pillars of competi-a countrys overall business networks and the quality of tiveness separately, it is important to keep in mind thatindividual firms operations and strategies. These factors they are not independent: they tend to reinforce eachare particularly important for countries at an advancedother, and a weakness in one area often has a negativestage of development, when, to a large extent, the impact on other areas. For example, a strong innova-more basic sources of productivity improvements have tion capacity (pillar 12) will be very difficult to achievebeen exhausted. The quality of a countrys businesswithout a healthy, well-educated and trained workforcenetworks and supporting industries, as measured by the (pillars 4 and 5) that is adept at absorbing new technolo- 8quantity and quality of local suppliers and the extent ofgies (pillar 9), and without sufficient financing (pillar 8)their interaction, is important for a variety of reasons.for R&D or an efficient goods market that makes itWhen companies and suppliers from a particular sectorpossible to take new innovations to market (pillar 6).are interconnected in geographically proximate groups, Although the pillars are aggregated into a single index,called clusters, efficiency is heightened, greater oppor-measures are reported for the 12 pillars separately be-tunities for innovation in processes and products arecause such details provide a sense of the specific areas increated, and barriers to entry for new firms are reduced.which a particular country needs to improve.Individual firms advanced operations and strategies The appendix describes the exact composition of(branding, marketing, distribution, advanced productionthe GCI and technical details of its construction.processes, and the production of unique and sophisti-cated products) spill over into the economy and lead toStages of development and the weighted Indexsophisticated and modern business processes across the While all of the pillars described above will matter to acountrys business sectors.certain extent for all economies, it is clear that they will affect them in different ways: the best way for VietnamTwelfth pillar: Innovation to improve its competitiveness is not the same as theThe final pillar of competitiveness is technological in- best way for Canada to do so. This is because Vietnamnovation. Although substantial gains can be obtained byand Canada are in different stages of development: asimproving institutions, building infrastructure, reducingcountries move along the development path, wagesmacroeconomic instability, or improving human capital, tend to increase and, in order to sustain this higherall these factors eventually seem to run into diminishingincome, labor productivity must increase.returns. The same is true for the efficiency of the labor,In line with the economic theory of stages of de-financial, and goods markets. In the long run, standards velopment, the GCI assumes that, in the first stage, theof living can be enhanced only by technological inno-economy is factor-driven and countries compete based onvation. Innovation is particularly important for econo-their factor endowmentsprimarily unskilled labor andmies as they approach the frontiers of knowledge and natural resources.19 Companies compete on the basis ofthe possibility of integrating and adapting exogenousprice and sell basic products or commodities, with theirtechnologies tends to disappear.18 low productivity reflected in low wages. MaintainingAlthough less-advanced countries can still improve competitiveness at this stage of development hingestheir productivity by adopting existing technologies primarily on well-functioning public and private institu-or making incremental improvements in other areas, tions (pillar 1), a well-developed infrastructure (pillarfor those that have reached the innovation stage of2), a stable macroeconomic environment (pillar 3), anddevelopment this is no longer sufficient for increasingThe Global Competitiveness Report 2011-2012 2011 World Economic Forum 24. 1.1: The Global Competitiveness Index 20112012Figure 1: The 12 pillars of competitivenessBasic requirements InstitutionsKey for Infrastructurefactor-driven Macroeconomic environment economies Health and primary educationEfficiency enhancers Higher education and training Goods market efficiency Key for Labor market efficiencyefficiency-driven Financial market developmenteconomies Technological readiness Market sizeInnovation and sophistication factors Key for Business sophisticationinnovation-driven Innovationeconomies9a healthy workforce that has received at least a basicpillars matter to a certain extent for all countries, theeducation (pillar 4). relative importance of each one depends on a countrys Yet as a country becomes more competitive, pro-particular stage of development. To implement thisductivity will increase and wages will rise with advanc-concept, the pillars are organized into three subindexes,ing development. Countries will then move into theeach critical to a particular stage of development.efficiency-driven stage of development, when they mustThe basic requirements subindex groups those pillarsbegin to develop more efficient production processesmost critical for countries in the factor-driven stage.and increase product quality because wages have risen The efficiency enhancers subindex includes those pillarsand they cannot increase prices. At this point, com-critical for countries in the efficiency-driven stage. Andpetitiveness is increasingly driven by higher education the innovation and sophistication factors subindex includesand training (pillar 5), efficient goods markets (pillarthe pillars critical to countries in the innovation-driven6), well-functioning labor markets (pillar 7), developedstage. The three subindexes are shown in Figure 1.financial markets (pillar 8), the ability to harness theThe weights attributed to each subindex in everybenefits of existing technologies (pillar 9), and a large stage of development are shown in Table 1. To obtaindomestic or foreign market (pillar 10). the weights shown in the table, a maximum likelihood Finally, as countries move into the innovation-drivenregression of GDP per capita was run against each sub-stage, wages will have risen by so much that they are index for past years, allowing for different coefficientsable to sustain those higher wages and the associated for each stage of development.20 The rounding of thesestandard of living only if their businesses are able to econometric estimates led to the choice of weightscompete with new and unique products. At this stage,displayed in Table 1.companies must compete by producing new and differ-ent goods using the most sophisticated production pro-Implementation of stages of development:cesses (pillar 11) and by innovating new ones (pillar 12).Smooth transitions The GCI takes the stages of development into Two criteria are used to allocate countries into stages ofaccount by attributing higher relative weights to those development. The first is the level of GDP per capitapillars that are more relevant for an economy given its at market exchange rates. This widely available measureparticular stage of development. That is, although all 12 is used as a proxy for wages, because internationallyThe Global Competitiveness Report 2011-2012 2011 World Economic Forum 25. 1.1: The Global Competitiveness Index 20112012Table 1: Subindex weights and income thresholds for stages of developmentSTAGES OF DEVELOPMENT Stage 1: Transition from Stage 2:Transition from Stage 3: Factor-driven stage 1 to stage 2Efficiency-driven stage 2 to stage 3 Innovation-driven GDP per capita (US$) thresholds*17,000 Weight for basic requirements subindex60% 4060%40%2040% 20% Weight for efficiency enhancers subindex35% 3550%50%50%50% Weight for innovation and sophistication factors subindex5%510%10%1030% 30%* For economies with a high dependency on mineral resources, GDP per capita is not the sole criterion for the determination of the stage of development. See text for details.comparable data on wages are not available for allAdjustments to the GCIcountries covered. The thresholds used are also shown This year the GCI drops one variable: within the finan-in Table 1. A second criterion measures the extent to cial market development pillar (8th), the measurement ofwhich countries are factor driven. This is measured byrestrictions on capital flows had to be removed from thethe share of exports of mineral goods in total exportsIndex as this information is no longer collected. In ad-(goods and services), assuming that countries that export dition, the sources for some variables changed this year;more than 70 percent of mineral resources (measured these are discussed in detail in Box 2.using a five-year average) are to a large extent factordriven.21 Country coverageAny countries falling in between two of the three A number of new countries have been added to the10stages are considered to be in transition. For theseGCI sample this year. These include Belize, Haiti,countries, the weights change smoothly as a country and Yemen. Additionally, Suriname, which had to bedevelops, reflecting the smooth transition from one dropped in the last edition because of a lack of Surveystage of development to another. This allows us todata, has been reinstated this year. At the same time, itplace increasingly more weight on those areas that arewas not possible to cover Libya because of the socialbecoming more important for the countrys competi-unrest in the country at the time the Survey was car-tiveness as the country develops, ensuring that the GCI ried out. Overall, these changes have led to an increasecan gradually penalize those countries that are not in coverage to a record number of 142 economies thispreparing for the next stage. The classification of coun- year.tries into stages of development is shown in Table 2.The Global Competitiveness Index 20112012 rankingsData sourcesTables 3 through 7 provide the detailed rankings of thisTo measure these concepts, the GCI uses statistical years GCI. The following sections discuss the findingsdata such as enrollment rates, government debt, bud-of the GCI 20112012 for the top performers globally,get deficit, and life expectancy, which are obtainedas well as for a number of selected economies in each offrom internationally recognized agencies, notably the the five following regions: Europe and North America,United Nations Educational, Scientific and Cultural Asia and the Pacific, Latin America and the Caribbean,Organization (UNESCO), the IMF, and the World the Middle East and North Africa, and sub-SaharanHealth Organization (WHO). The descriptions and Africa.22 An overview of the recent main trends indata sources of all these statistical variables are summa-competitiveness is provided in Box 3.rized in the Technical Notes and Sources at the end ofthis Report. Furthermore, the GCI uses data from theTop 10World Economic Forums annual Executive Opinion As in previous years, this years top 10 remain domi-Survey (Survey) to capture concepts that require a more nated by a number of European countries, with Sweden,qualitative assessment or for which internationally com-Finland, Denmark, Germany, and the Netherlandsparable statistical data are not available for the entire confirming their place among the most competitiveset of economies. The Survey process and the statisticaleconomies. Singapore continues its upward trend totreatment of data are described in detail in Chapter 1.3become the second-most competitive economy in theof this Report. world, overtaking Sweden, while the United Kingdomreturns to the top 10 as it recovers from the crisis. The Global Competitiveness Report 2011-2012 2011 World Economic Forum 26. 1.1: The Global Competitiveness Index 20112012Table 2: Countries/economies at each stage of development Stage 1: Transition fromStage 2: Transition fromStage 3: Factor-drivenstage 1 to stage 2 Efficiency-drivenstage 2 to stage 3 Innovation-driven (37 economies) (24 economies) (28 economies) (18 economies) (35 economies) Bangladesh AlgeriaAlbaniaArgentinaAustralia BeninAngola Belize Barbados Austria BoliviaArmeniaBosnia and Herzegovina Brazil Bahrain Burkina Faso Azerbaijan Bulgaria ChileBelgium BurundiBotswana Cape Verde CroatiaCanada Cambodia Brunei DarussalamChinaEstoniaCyprus Cameroon EgyptColombia HungaryCzech Republic Chad GeorgiaCosta Rica Latvia Denmark Cte dIvoireGuatemalaDominican Republic LebanonFinland Ethiopia Guyana EcuadorLithuaniaFrance Gambia, TheHonduras El SalvadorMexico Germany GhanaIran, Islamic Rep. IndonesiaOman Greece HaitiJamaicaJordan Poland Hong Kong SAR IndiaKazakhstan Macedonia, FYR Russian Federation Iceland KenyaKuwait Malaysia Slovak RepublicIreland Kyrgyz RepublicMongolia MauritiusTrinidad and TobagoIsrael LesothoParaguay Montenegro Turkey Italy Madagascar PhilippinesMoroccoUruguayJapan Malawi QatarNamibia Korea, Rep. Mali Saudi Arabia PanamaLuxembourg Mauritania Sri LankaPeruMalta MoldovaSyriaRomania Netherlands Mozambique UkraineSerbiaNew Zealand NepalVenezuelaSouth AfricaNorway Nicaragua SurinamePortugal Nigeria Swaziland Puerto Rico PakistanThailandSingapore RwandaTunisia Slovenia Senegal Spain 11 TajikistanSweden TanzaniaSwitzerland Timor-Leste Taiwan, China UgandaUnited Arab Emirates Vietnam United Kingdom Yemen United States Zambia ZimbabweSwitzerland retains its 1st place position again thisinclude an independent judiciary, a strong rule of law,year as a result of its continuing strong performanceand a highly accountable public sector. Competitivenessacross the board. The countrys most notable strengths is also buttressed by excellent infrastructure (5th), well-are related to innovation, technological readiness, andfunctioning goods markets (5th), and highly developedlabor market efficiency, where it tops the GCI rankings. financial markets (7th), which benefit from a sounderSwitzerlands scientific research institutions are among banking sector than seen in last years assessment.the worlds best, and the strong collaboration between Finally, Switzerlands macroeconomic environment isits academic and business sectors, combined with highamong the most stable in the world (11th) at a timecompany spending on R&D, ensures that much of this when many neighboring economies continue to strug-research is translated into marketable products and pro- gle in this area.cesses that are reinforced by strong intellectual property While Switzerland demonstrates many competi-protection. This robust innovative capacity is capturedtive strengths, maintaining its innovative capacity willby its high rate of patenting, for which Switzerland require boosting the university enrollment rate of 49.4ranks 7th worldwide. Productivity is further enhancedpercent, which continues to lag behind that of manyby a business sector and a population that are proac-other high-innovation countries.tive at adapting latest technologies, as well as by laborSingapore moves up by one place to 2nd posi-markets that balance employee protection with thetion, maintaining the lead among Asian economies.interests of employers. Moreover, public institutions in The countrys institutions continue to be assessed asSwitzerland are among the most effective and transpar- the best in the world, ranked 1st for both their lackent in the world (7th). Governance structures ensure a of corruption and government efficiency. Singaporelevel playing field, enhancing business confidence; theseplaces 1st and 2nd, respectively, for the efficiency of its The Global Competitiveness Report 2011-2012 2011 World Economic Forum 27. 1.1: The Global Competitiveness Index 20112012Box 2: Macroeconomic indicatorsThe collection of data is a critical phase in the computation ofup to 183 economies. Although almost all countries are coveredthe Global Competitiveness Index (GCI). The GCI itself compris-compris-for GDP and price-related data, data coverage for savings,es 113 indicators, and additional variables are used to compute government debt, and budget data had until this year includedcountries stages of development, the validation of other dataonly few, mainly advanced, economies. For those indicators, wepoints, and for empirical analysis. In total, about 20,000 data therefore were required to rely on a variety of sources, includ- includ-points are collected each year for the purpose of calculating ing the IMFs International Financial Statistics and Countrythe GCI. About 12,000 data points are drawn from the ForumsReports (Article IV consultations); regional development banksExecutive Opinion Survey, and the remainder are derived fromstatistical publications; central banks and ministries; and theexternal sources. Economist Intelligence Unit, an economic research firm.One guiding principle in this process is that we alwaysIn its April 2011 edition of the WEO database, the IMFuse, to the extent possible, the most well respected interna-interna-significantly expanded its country coverage for the indicatorstional institution in each particular issue area as the data pro-pro-in question. It now reports budgetary, debt, and savings datavider for each indicator. Indeed, comparability across countriesfor a vast majority of the 142 economies included in the GCIand quality of the data are paramount. Cross-country and inter- (see Table 1). In accordance with the principle of using a cen- cen-year comparisons are meaningful only if, for any given indicator, tral source to the degree possible, we have decided to use theall the data points capture the same concept over the sameWEO as the main source for all macroeconomic indicators withperiod. Of course, given the extensive country coverage of thethe exception of the country credit rating measure, which isGCIa record 142 economies this yearit is not always pos-pos-not covered by the IMF.1 For the many countries with data notsible to obtain all the data points for an indicator from a uniquepreviously obtained from the IMF, this change in source createssource. In order to address missing data points, which cana break in the time series and results in variations for somealso lead to less reliable results, sometimes other sources are countries that are larger than the year-on-year change thatused and/or previous years data are taken, assuming that the would have been observed had the same source been usedtime-sensitivity of the particular indicator is not too great. Theagain this year. Readers should therefore be careful whenForums Partner Institutes assist with data collection. Thanksdrawing comparisons between this years and last yearsto their local presence, they have access to data from national macroeconomicmacroeconomic data, as part of the difference can be attributed12statistical offices, ministries, and government agencies. As ato this change in source. For the newly published indicators, theresult of these efforts, the percentage of missing data points is WEO reports time-series data going back several years, thususually below 0.5 percent.allowing the evolution in a countrys situation as assessed byThe collection of several indicators composing the macro- macro- the IMF to be tracked.economic environment pillar of the GCI, including government Moving to a single source with a common definitiondebt and budget balance, has proven challenging in past years contributes to ensuring comparability across countries. Andbecause there is no one central source for these data. Thebecause the IMF is, because of its expertise, arguably theInternational Monetary Fund (IMF) has always been the prime best source of macroeconomic data internationally, this yearssource for all macroeconomic data. One of the IMFs flagshipchange in source for these data ensures a more accurate, time- time-publications, the World Economic Outlook (WEO), provides time-lier, and ultimately better assessment of the fiscal situation ofseries data for dozens of financial and economic indicators for the countries going forward.2(Contd.)goods and labor markets and leads the world in termsfor innovation-led growth. The quality of its publicof financial market development, ensuring the properinstitutions is first-rate, with a very high degree ofallocation of these factors to their best use. Singaporeefficiency, trust, and transparency. Private institutionsalso has world-class infrastructure (3rd), with excellent also receive excellent marks (3rd), with firms that dem-roads, ports, and air transport facilities. In addition,onstrate the highest ethical behavior (3rd), supportedthe countrys competitiveness is reinforced by a strong by strong auditing and reporting standards (2nd) andfocus on education, providing individuals with the skills well-functioning corporate boards (1st). Goods andneeded for a rapidly changing global economy. In orderfinancial markets are also very efficient, although theto strengthen its competitiveness further, Singaporelabor market could be more flexible (25th). Combinedcould encourage even stronger adoption of the latestwith a strong focus on education over the years (2ndtechnologies (10th) as well as measures that support thefor higher education and training) and a high level ofsophistication of its companies (15th). technological adoption (2nd), Sweden has developed a Sweden, overtaken by Singapore, falls one placevery sophisticated business culture (2nd) and is one ofto 3rd position. Like Switzerland, the country has been the worlds leading innovators (2nd). Last but not least,placing significant emphasis on creating the conditions the country boasts a stable macroeconomic environmentThe Global Competitiveness Report 2011-2012 2011 World Economic Forum 28. 1.1: The Global Competitiveness Index 20112012Box 2: Macroeconomic indicators (contd.)Table 1: Description of selected GCI macroeconomic indicatorsWEO coverage/142*Indicator title ExceptionsPeriodAlternative sources (if any) General definition Macroeconomic indicators primarily obtained from the World Economic Outlook (April 2011) 3.01 Government139 2010African DevelopmentNet lending (+)/ borrowing () is calculatedbudget balance,Malawi;Bank, African Statisticalas general government revenue minus total% GDP Puerto Rico;Yearbook 2011; 2011; expenditure. This is a core Government FinanceRwandaAfricanEconomicOutlook.Statistics (GFS) balance that measures theorg (accessed July 1,extent to which general government is either2011); national sourcesputting financial resources at the disposal of other sectors in the economy and nonresidents (net lending), or utilizing the financial resources generated by other sectors and nonresidents (net borrowing). 3.02 Gross national137 2010 or IMF, Public InformationAggregate national savings is defined as public-savings, % GDPBruneimostNotices (various issues);and private-sector savings as a percentage ofDarussalam; recentnational sources nominal GDP. National savings equals grossPuerto Rico;year domestic investment plus the current-accountSwitzerland;availablebalance.Timor-Leste;Zimbabwe 3.03 Inflation,141 2010National sources Annual percent change in year average consumerannual %Puerto Ricoprice index.change 13 3.05 General 136 2010IMF, Public InformationGross debt consists of all liabilities that requiregovernmentAlgeria;Notices (various issues);payment or payments of interest and/or principaldebt, % GDP Bangladesh; Asian Development Bank,by the debtor to the creditor at a date or datesMongolia; Asian Developmentin the future. This includes debt liabilities inPuerto Rico;Outlook 2011; Economistthe form of special drawing rights, currencySri Lanka;Intelligence Unit, and deposits, debt securities, loans, insurance,Timor-Leste CountryData Database pensions and standardized guarantee schemes,(accessed 17 July 2011); and other accounts payable. Thus, all liabilities innational sources the Government Finance Statistics Manual 2001 system are debt, except for equity and investment fund shares and financial derivatives and employee stock options. 0.01 GDP (US$141 2010National sourceGDP values are based upon GDP in the currentbillions) Puerto Riconational currency and US dollar exchange rate projections. According to the System of National Accounts 2008, the valuation of output should be carried out at basic prices. 0.03 GDP per capita139 2010Authors calculation;GDP per capita is derived by first converting(US$) Montenegro; national sourceGDP in national currency to US dollars and thenPuerto Rico; dividing it by total population.Trinidad andTobago (Contd.)The Global Competitiveness Report 2011-2012 2011 World Economic Forum 29. 1.1: The Global Competitiveness Index 20112012Box 2: Macroeconomic indicators (contd.)Table 1: Description of selected GCI macroeconomic indicators (contd.) WEO coverage/142*Indicator titleExceptionsPeriodAlternative sources (if any) General definitionMacroeconomic indicators obtained from a different source3.04Interest rateNot applicable2010 or IMF, International This indicator measures the difference betweenspread, %mostFinancial Statistics the typical short-term lending and deposit rates. recentdatabase (accessed July year17, 2011) and country available tables (July 2011); Economist Intelligence Unit, CountryData Database (accessed July 17, 2011)3.06Country credit Not applicableMarch Institutional Investor Country credit ratings developed by Institutionalrating, 01002011 Investor are based on information provided by(best)senior economists and sovereign-debt analystsat leading global banks and money managementand security firms. Twice a year, the respondentsgrade each country on a scale of 0 to 100, with100 representing the least chance of default.* Number of economies for which the IMFs World Economic Outlook (WEO) database was used. Economies for which data were obtained from a different provider appear in italics.14 Notes 1 Most of the data on lending and deposit interest rates2It must be noted that although the IMF does provide used to compute the interest spread (indicator 3.04) a general definition for the indicators, country analysts are from the International Financial Statistics database, amake adjustments when accounting for expenses and statistical database maintained by the IMF . revenues (government balance), as well as liabilities andassets (government debt).(13th), with an almost balanced budget and manageablehealthy, despite a small increase in the governmentspublic debt levels. These characteristics come togetherbudget deficit.to make Sweden one of the most productive and com-The United States continues the decline thatpetitive economies in the world. began three years ago, falling one more position to Finland moves up three places since last year to5th place. While many structural features continue toreach 4th position. Similar to other countries in themake its economy extremely productive, a number ofregion, the country boasts well-functioning and highly escalating weaknesses have lowered the US ranking intransparent public institutions (3rd), topping several recent years. US companies are highly sophisticatedindicators included in this category. It also occupies the and innovative, supported by an excellent universitytop position in the higher education and training pillar,system that collaborates admirably with the businessthe result of a strong focus on education over recentsector in R&D. Combined with flexible labor marketsdecades. This has provided the workforce with the skills and the scale opportunities afforded by the shee