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Forum, though the country continues to struggle in making strong headway.
Sri Lanka’s rank of 65 is out of 148 countries but the score of 4.2 (from a range of 1 to 7) remains unchanged from the previous year’s index. Though year on year there is an improvement, Sri Lanka is yet to catch up to the higher rank of 52 (out of 142 countries) enjoyed three years ago (2011/12 Index).
At present Sri Lanka remains among 20 countries which are in transition from Stage 1 (factor driven economies) to Stage 2 (efficiency driven nations).
Judged by 12 factors (see table) and three overall drivers, Sri Lanka’s major stride had been in efficiency enhancers moving up to 69th place from 77th. In the other two Sri Lanka’s rank has slipped.
Analysts said President Mahinda Rajapaksa’s Government may not fully agree with the latest WEF’s Global Competitiveness Report (GCR) released yesterday. For example, in the sub factor of infrastructure Sri Lanka has dropped to 73rd from 62nd despite massive public investments in recent years and considerable improvement on the ground.
However, analysts noted the WEF index as in the case of World Bank-IFC’s Ease of Doing Business Index are useful benchmarks to improve overall competitiveness. In the latter index Sri Lanka made rapid progress last year to 81st from 96th last year and is likely to move up further when its latest version is out later this year.
Sri Lanka ranks best globally in business sophistication placed at 34th but down from 31st in the previous year’s index.
The Global Competitiveness Report (GCR) emphasised that excellent innovation and strong institutional environments are increasingly influencing economies’ competitiveness.
“Innovation becomes even more critical in terms of an economy’s ability to foster future prosperity,” said Klaus Schwab, Founder and Executive Chairman of the World Economic Forum. “I predict that the traditional distinction between countries being ‘developed’ or ‘less developed’ will gradually disappear and we will instead refer to them much more in terms of being ‘innovation rich’ vs. ‘innovation poor’ countries. It is therefore vital that leaders from business, government and civil society work collaboratively to create education systems and enable environments which foster innovation.”
Xavier Sala-i-Martin, Professor of Economics, Columbia University, USA said: “The report highlights a shift in the narrative of the global 
economy from one year ago, when fire-fighting still characterised much of global and regional economic policy. This has now given way to an increasing urgency for leaders to make wide-ranging structural reforms to their economies.”
Whilst Switzerland marked its fifth consecutive year at the top, Singapore remained Asia’s most competitive unchanged at number 2, whilst Finland retained its third place. Germany moved up two places to number 4 whilst US reversed its four year downward trend to rebound to number 5 from 7. Sweden dipped and Hong Kong moved two places to 7th followed by Netherlands (down two places), Japan (up one place to 9th) and UK within the top 10. China remained unchanged at 29 whilst Indian dropped one place to 60 overtaken by the Philippines which jumped to 59 from 65 in the previous year.
Indonesia has risen to 38th making it the most improved of the G20 economies since 2006, while Korea (25th) falls by six places. Developing Asian nations display very mixed performances and trends: Malaysia places 24th while countries such as Nepal (117th), Pakistan (133rd) and Timor-Leste (138th) are near the bottom of the ranking. Bhutan (109th), Lao PDR (81st) and Myanmar (139th) join the index for the first time.
The 2013/14 report said The United States continues to be a world leader in bringing innovative products and services to market. Its rise in the ranking is down to a perceived improvement in the country’s financial market as well as greater confidence in its public institutions. However, serious concerns persist over its macroeconomic stability, which ranks 117 out of 148 economies.
It also said some of the world’s largest emerging market economies must also engage business, government and civil society to implement long-overdue reforms. Of the five BRICS, the People’s Republic of China (29th) continues to lead the group, followed by South Africa (53rd), Brazil (56th) India (60th) and Russia (64th). Among the BRICS, only Russia improves its ranking, climbing three places, while Brazil drops eight places.
In the Middle East and North Africa, Qatar (13th) tops the region’s rankings, with the United Arab Emirates (19th) entering the top 20 for the first time. Saudi Arabia (20th) falls two places but remains among the top 20. Israel ranks 27th. Egypt (118th) drops a further 11 places on last year’s index. Bahrain (43rd), Jordan (68th) and Morocco (77th) also decline. Elsewhere in the region, Algeria moves up to 100th place and Tunisia re-enters the index at 83rd.
In sub-Saharan Africa, Mauritius (45th) overtakes South Africa (53rd) as the region’s most competitive economy. With only eight countries in the region featuring in the top 100, profound efforts across the board are clearly needed to improve Africa’s competitiveness. Among low-income economies, Kenya makes the biggest improvement, rising by ten places to 96th position. Nigeria (120th) continues to be ranked low, highlighting the need for it to diversify its economy.
Despite robust economic growth in previous years, Latin America continues to suffer from low rates of productivity and the results show overall stagnation in competitiveness performance. Chile (34th) continues to lead the regional rankings ahead of Panama (40th), Costa Rica (54th) and Mexico (55th), which all remain relatively stable.
Defining competitiveness as the set of institutions, policies and factors that determine the level of productivity of a country, GCI scores are calculated by drawing together country-level data covering 12 categories, the pillars of competitiveness, that together make up a comprehensive picture of a country’s competitiveness. The 12 pillars are: institutions, infrastructure, macroeconomic environment, health and primary education, higher education and training, goods market efficiency, labour market efficiency, financial market development, technological readiness, market size, business sophistication and innovation. The report also factors in a survey among business leaders, assessing the government’s efficiency and transparency.
