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Lesotho drops in global competitive index

by Sunday Express
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Staff Writer

LESOTHO has slumped on the Global Competitiveness Index (GCI) — from 107 to 113 out 140 countries —largely due to limited access to finance, corruption and policy instability, the latest World Economic Forum (WEF) report indicates.

The ranking, which was released last Wednesday, is normally used by investors to gauge the economic competiveness of a country.

Defining competitiveness as a set of institutions, policies and factors which determine the level of productivity of a country, GCI scores are calculated using data covering 12 categories, referred to as pillars of competitiveness. These are institutions, infrastructure, macro-economic 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.

In the institution category, corruption remains a problem in Lesotho, with the country dropping to 102 from last year’s 58. At 131, the limited availability of financial services remained at the same position as last year, while the transparency of government policymaking slumped from last year’s 71 to 92.

On the health front, the impact of the high HIV/AIDS prevalence rate on business remained a major concern, at 111 compared to last year’s 86.

Languishing at position 117 is secondary education enrolment, while tertiary education enrolment also leaves a lot of room for improvement at 112. There was marginal improvement of firm-level technology absorption of one point from last year’s 136.

Overall, Lesotho had a score of 3.7, with Switzerland ranked top with 5.76, while the lowest is Guinea ranked 140, with 2.84.

The highest for Sub-Saharan Africa is Mauritius in 46th place, while South Africa is up seven places to 49th (4.39).

The report found out globally, there were worrying signs that “the new normal” of suppressed economic and productivity growth and persistently high unemployment were damaging resilience and leaving the world vulnerable to another protracted slump.

It warns: “Failure to embrace long-term structural reforms that boost productivity and free entrepreneurial talent is harming the global economy’s ability to improve living standards, solve persistently high unemployment and generate adequate resilience for future economic downturns.”

Emerging markets are seen to represent the greatest cause for concern, with many of the larger markets seeing reverses this year, having failed to enact crucial institutional and market reforms during better times. Failure to boost competitiveness, in particular, was found to be compromising resilience to recession and other shocks.

This year’s report found a correlation between highly competitive countries and those that have either withstood the global economic crisis or made a swift recovery from it. It also found a close link between competitiveness and an economy’s ability to nurture, attract, leverage and support talent. The top-ranking countries all fare well in this regard.

WEF founder and executive chairman, Klaus Schwab, noted: “The fourth industrial revolution is facilitating the rise of completely new industries and economic models and the rapid decline of others.

“To remain competitive in this new economic landscape will require greater emphasis than ever before on key drivers of productivity, such as talent and innovation.”

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