Global Competitive Report 2011-12

Nepal improved its score to 3.47 to climb up to 125th position — among 142 economies — from last year’s score of 3.36 and 130th position among 139 economies according to the Global Competitive Report 2011-12.

The report released on 7th September 2011 by World Economic Forum globally, the country has improved in macroeconomic environment and health, though its needs to have a lots of improvements in institutions and infrastructures — the two key pillars of the index among the 12 pillars based upon which the score is calculated.

However, Nepal still falls under factor driven country category that needs to focus on first four pillars — institutions, infrastructure, macroeconomic environment and health and primary education.

Under the first pillar — institutions — government’s attitude towards market also plays key role and under second pillar — infrastructure — market integration to reduce cost to the market is key, which has pulled Nepal's overall score.

There are 37 economies like Nepal that fall under the factor driven category that has their per capita income below $2,000. The economies that have between $3,000 and $8,999 per capita income fall under efficiency driven category which has 28 countries and the economies that have over $17,000 per capita income fall under the innovative driven category that has 35 countries.

Nepal’s GDP stands at $15.8 billion with $562 per capita income, according to the report.

The report has identified government instability, inefficient government bureaucracy, policy instability, corruption and inadequate supply of infrastructure as five most problematic factors for doing business, which was similar to last years report.

The Global Competitiveness Report’s competitiveness ranking is based on the Global Competitiveness Index (GCI), developed for the World Economic Forum by Sala-i-Martin and introduced in 2004.

The GCI comprises 12 pillars — institutions, infrastructure, macroeconomic environment, health and primary education, higher education and training, goods market efficiency, labor market efficiency, financial market development, technological readiness, market size, business sophistication and innovation — of competitiveness that together provide a comprehensive picture of a country’s competitiveness landscape.

The rankings are calculated from both publicly available data and the Executive Opinion Survey — a comprehensive annual survey conducted by the World Economic Forum with its network of Partner Institutes. In Nepal, (Centre for Economic Development and Administration (CEDA) is the partner that has been releasing the report since 2006.

This year, over 14,000 business leaders were polled in a record 142 economies. In Nepal some 103 small (with less than 20 employees), medium (between 20 and 50 employees) and large (with over 50 employees) industries were polled for the survey that is designed to capture a broad range of factors affecting an economy’s business climate.

As usual Switzerland still leads the world in competitiveness because of innovation and labor market efficiency, whereas Singapore came second and Sweden third.

The United States ranked fifth, falling for the third year in a row. 

The United States has good universities, is strong in research and development and has a big economy and a flexible workforce, the report said, adding that the business community, however, continues to be critical toward public and private institutions.

The South Asian ranking

• Sri Lanka — 52

• India — 56

• Bangladesh — 108

• Pakistan — 118

• Nepal — 125