The Public Authority for Investment, Promotion & Export Development (PAIPED) and the Oman-based think-tank International Research Foundation (IRF), which announced details of the 2012/13 World Economic Forum's Global Competitiveness Index, said this year's Report is a clear testament to the success of the work being carried out by Omani government institutions in helping raise the Sultanate's competitiveness and improve the nation's business environment and above all to the solid economic planning and vision underpinning this.
Conducted by the World Economic Forum in partnership with leading academics and a global network of research institutes, the Index calculates its rankings from publicly available data and more than 15,000 business surveys in the 144 economies.
Senior representatives drawn from across Oman's private sector gave their input to the Executive Opinion Survey, which provides the basis of the World Economic Forum Report. The survey is carried out by PAIPED and IIR who are part of the World Economic Forum's network of over 160 Partner Institutes worldwide.
Launching the Report, HE Dr. Salem Ben Nasser Al Ismaily, Chairman, PAIPED emphasised the importance of benchmarking Oman's competitiveness:
"Benchmarking our competitive performance is an important exercise and the 2012/13 World Economic Forum Global Competitiveness Index provides government and the private sector with data that can help formulate policy recommendations that will enable Oman to achieve sustainable and long-lasting competitive gains."
Noting Oman's consolidation of its position in the Report, HE Dr. Al Ismaily cautioned against complacency and recommended: "Oman maintains its focus on improving policies related to the labour market, education, skills and competition policy. At the same time, we must ensure our banking system is providing an adequate supply of credit to support Oman's thriving enterprise culture."
Private Sector Perspective
Speaking on behalf of the private sector, young Omani FMCG business owner and Marketing Director for Naranjee Hirjee & Co, Nikhil Sampat, said: "Oman's ranking reaffirms its pro-business stance and openness - both of which play a key role in helping us remain an attractive location for business and trade."
S. Gopalan, CEO, Reem Batteries & Power Appliances Company remarked: "To be successful, we must continue to focus on improving our macroeconomic environment, removing any unnecessary regulatory barriers faced by the private sector. In addition, we have to work hand-in-hand with government to ensure policies and regulations support the ability of domestic companies to be competitive and productive on the international stage. It's only by building such capacity and institutional policies, will we be able to move to the next stage of improving the Sultanate's competitiveness and achieve sustained higher levels of prosperity. In this regard, we've made significant gains"
As in previous years, the top 10 remain dominated by a number of European countries: in the overall ranking, Switzerland led the table followed by Singapore, Finland, Sweden, the Netherlands, Germany, the US, the UK, Hong Kong SAR and Japan.
From a regional perspective, and including Oman (32nd), several countries from the Arab World occupy the upper half of the rankings, including: Qatar (11th); Saudi Arabia (18th); United Arab Emirates (24th); Kuwait (37th); Bahrain (35th) and Jordan (64th).
First published in 1979, the report evaluates countries' economic environment and their ability to achieve sustained levels of prosperity and growth.
The World Economic Forum defines national economic competitiveness as: "The set of institutions, policies and factors that determine the level of productivity of a country." A country's Global Competitive Index is calculated from both publicly available data and the Executive Opinion Survey, an annual survey conducted by the World Economic Forum together with its network of partner institutes which includes leading research and business organizations.
According to the World Economic Forum, the report "assesses the ability of countries to provide high levels of prosperity to their citizens. This in turn depends on how productively a country uses available resources. Therefore, the Global Competitiveness Index measures the set of institutions, policies and factors that set the sustainable current and medium-term levels of economic prosperity."
Commenting on Oman's positive competitive position in the results, His Highness Sayyid Faisal Al Said, PAIPED's Director General for Marketing & Media said: "The figures released in this year's Report are a clear endorsement of the hard work being carried out by Oman's public and private sectors."
His Highness added: "Oman's openness to investment is crucial to its sustainable economic growth. Government in partnership with business is working tirelessly to ensure we remain attractive to companies around the globe. Indeed, a clear economic approach has helped Oman maintain its position as a top destination in the Middle East in which to do business. It's now our task to make sure this very positive image is promoted worldwide."
Oman in Detail
Oman's solid foundations are made up of a high-quality institutional framework, ranked 17th in the world; a stable macroeconomic environment (5th); goods market efficiency (25th); and financial market development (26th).
Oman also performed well in areas including: quality of roads (5th); ease of access to loans (11th); availability of venture capital (14th); government budget balance % of GDP (8th); general government debt % of GDP (4th); soundness of banks (21st); quality of overall infrastructure (20th); intellectual property protection (25th); and public trust of politicians (13th).
Categories of Economies
The World Economic Forum's 2012/13 report ranks 144 economies that are separated into three stages, according to where they are in their development: factor-driven economies (stage 1), efficiency-driven economies (stage 2) and innovation-driven economies (stage 3).
The World Economic Forum places Oman in the transition phase of development between efficiency-driven to innovation-driven. Oman is joined in this category by countries such as Argentina, Brazil, Estonia, Mexico, Poland and the Russian Federation.
Pillars of Competitiveness
The index is based on 12 pillars of competitiveness that examines institutions; infrastructure; macroeconomic stability; health and primary education; higher education and training; goods market efficiency; labour market efficiency; financial market sophistication; technological readiness; market size; business sophistication; and innovation.
The Report's variables are organized into nine pillars, with each representing an area considered as an important determinant of competitiveness.
It notes that as a nation develops, wages tend to increase and that in order to sustain this higher income, labour productivity must improve for the nation to be competitive. But what creates productivity in Australia may be different from what drives it in Peru. Thus, the Index separates countries into three specific stages: factor-driven, efficiency-driven and innovation-driven, each implying a growing degree of complexity in the operation of the economy.
In the factor-driven stage, countries compete based on their factor endowments, primarily unskilled labour and natural resources. To maintain competitiveness at this stage of development, competitiveness hinges on well-functioning public and private institutions (pillar 1), appropriate infrastructure (pillar 2), a stable macroeconomic framework (pillar 3) and good health and primary education (pillar 4).
As wages rise with advancing development, countries move into the efficiency-driven stage of development, when they must begin to develop more efficient production processes and increase product quality. At this point, competitiveness is driven by higher education and training (pillar 5), efficient markets (pillar 6) and the ability to harness the benefits of existing technologies (pillar 7).
Finally, and as countries move into the innovation-driven stage, they are only able to sustain higher wages and a higher standard of living if their businesses are able to compete by providing new or unique products. At this stage, companies must compete by producing new and different goods using the most sophisticated production processes (pillar 8) and through innovation (pillar 9).
Ongoing Global Challenges
For all that the World Economic Forum Report's data can teach us, it is important to bear in mind that a nation's ranking can be influenced by factors beyond its control such as the economic realities of our world.
"The world is still recovering from the biggest debt and financial crisis it has faced in over half a century - a recovery that is made no easier by the ongoing challenges in the Euro Zone. But in the midst of some sobering economic facts, we should not lose sight of the positive economic strides Oman has made and continues to make in so many areas," remarked Mohammed Al Maskari, Director General of Oman's flagship technology park, Knowledge Oasis Muscat.
The Way Forward
The 2012/13 World Economic Forum Global Competitiveness Index highlights the fact that Oman has intrinsic strengths to build on. For example, its open economy offers international investors an attractive and safe location. Moreover, the Sultanate's institutions, legal framework, tax systems and stock market regulation are some of the best in the world.
"Despite the turbulence of the global economy, Oman is performing well on the most important economic metrics. However, to make the transition to higher productivity and higher levels of prosperity further efforts are required to enhance our competitiveness with regard technological readiness, labour regulations, education, particularly in science and mathematics, and encouraging more women to enter the labour market.
If we're successful in making progress in these areas then more Omani companies will compete in the global market and so create new jobs and rising prosperity for the people of Oman," concluded HE Dr. Al Ismaily.