The Annual Global Competitiveness Report (GCR) from the World Economic Forum (WEF) shows that Sri Lanka has made impressive progress over the last year. The country has climbed 10 places to the 52nd rank in 2011-12. The GCR finds Asia has become globally more competitive as a result of its rise in economic prominence. Over the past five years, China, Indonesia, Vietnam, and Sri Lanka have made important strides in the GCI rankings.
The GCR report assesses the ability of countries to provide high levels of prosperity to their citizens, which 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.
Across all indicators, Sri Lanka shows improvements on 80% of them - 80-90 of the 110 indicators - both in terms of scores as well as rank. Sri Lanka made the greatest improvements in scores, year-on-year, in the pillars of ‘macroeconomic stability’ (up by 0.48 points) and ‘infrastructure’ (up by 0.33 points). Meanwhile, the most noteworthy decline in scores was in the pillar of ‘labour market efficiency’ (down by 0.11 points).
The dramatic jump by Sri Lanka in the last few years in GCR rankings might not be sustainable going forward. Also, it may be easier to bring in improvements in smaller economies, unlike India. But it may be noted that these strides are not only from peace dividends due to a strong positive sentiment since the end of the civil war. Indeed, most macroeconomic indicators also support the high growth and prosperity in the economy. The report lists inflation, access to financing, inefficient government bureaucracy, political instability, corruption and inadequate infrastructure as the main problems faced while doing business in Sri Lanka. We believe that many of these concerns are likely to wane with proactive policy intervention by the Sri Lankan government, while a few of them might just stay put, being ‘generic’ in nature.We remain positive on the sustainability of growth process in the economy.
On the global economy, Xavier Sala-i-Martin, Professor of Economics, Columbia University, USA, and co-author of the GCR, notes in the report - “Amid re-emerging concerns about the global economic outlook, policy-makers must not lose sight of long-term competitiveness fundamentals. For the recovery to be put on a more stable footing, emerging and developing economies must ensure that growth is based on productivity enhancements. Advanced economies, many of which struggle with fiscal challenges and anaemic growth, need to focus on competitiveness-enhancing measures in order to create a virtuous cycle of growth and ensure solid economic recovery.”
