Ukraine: Competitiveness, Trust and Confidence Thierry Geiger, Economist @ Centre for Global Competitiveness and Performance Launch of The Ukraine Competitiveness Report 2011, Kyiv, 30 November 2011
Unique collaboration 2008 Data collection Global analysis and methodology chapter Regional GCI calculation Regional analysis Report publication Launch Outreach activities
Training and support
2009
2010
2011
Rankings countries since 1979. The World Economic Forum is a leader in benchmarking and composite indicators
Competitiveness = The set of institutions, policies, and factors that determine the level of productivity of a country, taking into account its level of development.
The 12 dimensions of the Global Competitiveness Index 1. Institutions
5. Higher education and training
11. Business sophistication
2. Infrastructure
6. Goods market efficiency
12. Innovation
3. Macroeconomic environment
7. Labor market efficiency
4. Health & primary education
8. Financial market development
9. Technological readiness 10. Market size
Basic requirements
Efficiency enhancers
Sophistication and innovation factors
The Global Competitiveness Index
Stages of development and competitiveness drivers Competitiveness drivers Innovation
Transition stage
Factordriven stage
Efficiencydriven stage
Transition stage
Innovationdriven stage
Efficiency
$17,000
$9,000
$3,000
$2,000
Basic GDP per capita (not to scale)
The Global Competitiveness Index 2011-2012 Rank Economy
Score Delta
Rank Economy
Score Delta
1
Switzerland
5.74
=
50
South Africa
4.34
+4
2
Singapore
5.63
+1
53
Brazil
4.32
+5
3
Sweden
5.61
-1
55
Azerbaijan
4.31
+2
4
Finland
5.47
+3
56
India
4.30
-5
5
United States
5.43
-1
59
Turkey
4.28
+2
6
Germany
5.41
-1
64
Latvia
4.24
+6
7
Netherlands
5.41
+1
66
Russia
4.21
-3
8
Denmark
5.40
+1
72
Kazakhstan
4.18
=
9
Japan
5.40
-3
77
Romania
4.08
-10
10
United Kingdom
5.39
+2
82 Ukraine
4.00
+7
26
China
4.90
+1
88
3.95
+5
33
Estonia
4.62
=
105 Tajikistan
3.77
+11
41
Poland
4.46
-2
126 Kyrgyz Republic
3.45
-3
Georgia
Global Competitiveness Index Score 7 6 5
EU 15
4
EU Accession 12 Ukraine CIS (excl. UKR)
3 2 1
2005
2006
2007
2008
2009
2010
2011
Spaghetti bowl Percentile (% of countries ranked below)
Global Competitiveness Index 2005 2006 2007
2008
2009
2010
2011
90th
70th
China Estonia Poland
60th
Azerbaijan
80th
Russian Federation Kazakhstan
Median
Ukraine
40th 30th
44%
43% Tajikistan
20th 10th
Bottom 64/114
69/122
73/131
72/134
82/133
89/139
82/142
Ukraine in the 12 pillars of the GCI Ukraine
GCI score
EU Accession 12
CIS (excl. Ukraine)
7
4
1 Ukraine pillar rank
3,0
3,9
4,2
5,6
4,6
3,6
4,4
3,4
3,5
3,5
3,1
2,8
131
71
112
74
51
129
61
116
82
38
103
74
The Fear Factor Swiss francs per Euro € 1,8
1.68 CHF per € on 12 October 2007
1,7 1,6
1,5 1,4 1,3 1,2 1,1
1,0
Source: European Central Bank
1.05 CHF per € on 10 August 2011
The Fear Factor Gold prices (closing) US$ 2 000 1 800 1 600
1 400 1 200 1 000 800 600 400 200
0
Source: Bundesbank
$1,895 on 5 September 2011
The Fear Factor Bond yields % 20
secondary market yields of selected government bonds with a remaining maturity close to ten years
Greece-Germany spread: 16% in October 2011
18 16
Greece
14 12 10
8 6
Portugal Greece-Germany spread: <1% until September 2008
Italy
4 2
0
Source: European Central Bank
Germany
The Fear Factor VIX Index Chicago Board Options Exchange Market Volatility Index 90 80 70
60 50 40
30 20 10 0
Source: CBOE
Record high on 20 November 2008
Difficult times… again
Examples betray uncertainty and lack of confidence Investors and businesses grow increasingly risk-averse and look for security The countries most at risk of being shun away from are those perceived as risky and with uncertain prospects Ukraine remains one of the vulnerable countries. Why?
Selected results from the GCI for Ukraine Indicator
Rank out of 142
Score 1-7 (best)
Respect of property rights
137
2.7
Irregular payments and bribes
134
2.6
Judicial independence
134
2.1
Efficiency of legal framework in settling disputes
138
2.3
Protection of minority shareholdersâ&#x20AC;&#x2122; interests
138
2.9
Effectiveness of anti-monopoly policy
136
2.8
Extent and effect of taxation
141
2.2
Soundness of banks
141
2.8
Reliance on professional management
131
3.3
Source: World Economic Forum
Of the importance of trust and confidence
Lack of predictability and transparency, weak and unfair enforcement of rules, uneven playing field all lead to erosion of trust and confidence Unfortunate, because trust and confidence influence lending, investment and hiring decisions Building trust and restoring confidence, especially in institutions and the banking sector, is essential for competitiveness It should be Ukraine’s priority
And with a good dose of trust and confidenceâ&#x20AC;Ś
Thank you! www.weforum.org/gcr