High-tech innovation 'can boost Saudi competitiveness'

High-tech innovation 'can boost Saudi competitiveness'
Updated 09 September 2013

High-tech innovation 'can boost Saudi competitiveness'

High-tech innovation 'can boost Saudi competitiveness'

Saudi Arabia has been implementing multiple reforms over the last several years to enhance competitiveness, according to the Kingdom’s economists and market analysts.
"In the past five years more than 40 competitiveness reforms have been implemented. As a testament to Saudi Arabia's competitive environment, the World Bank's Ease of Doing Business Index jumped from 67th to 22nd place," said John Sfakianakis, chief investment strategist at Masic.
His remarks to Arab News follow references made to Saudi Arabia in the Global Competitiveness Report 2013-2014 launched recently.
Excellent innovation and strong institutional environments are increasingly influencing economies’ competitiveness, said the report.
In the Middle East and North Africa, Qatar (13th) tops the region's rankings, with the UAE (19th) entering the top 20 for the first time.
Saudi Arabia (20th) fell 2 places but remained among the top 20.
"Institutions are far more open for business, higher education is making tremendous improvements, financial market developments are deepening and innovation is gaining traction," said Sfakianakis.
"In the past five years more than 40 competitiveness reforms have been implemented," he pointed out.
The report acknowledged that Saudi Arabia had seen a number of improvements to its competitiveness in recent years that had resulted in more efficient markets and sophisticated businesses.
"High macroeconomic stability (4th) and strong, albeit falling, use of ICTs for productivity improvements contribute to maintaining Saudi Arabia's strong position in the Global Competitiveness (GCI)," said the report.
"As much as the recent developments are commendable, the country faces important challenges going forward. Health and education do not meet the standards of other countries at similar income levels," it said.
"Although some progress is visible in health and primary education, improvements are being made from a low level. As a result, the country continues to occupy low ranks in the health and primary education pillar (53rd)," added the report.
It said: "Room for improvement also remains on the higher education and training pillar (48th), where the assessment has weakened over the past year. Labor market efficiency also declines, to a low 70th position, in this edition. Reform in this area will be of great significance to Saudi Arabia given the growing number of young people who will enter the labor market over the next several years."
The report said: "More efficient use of talent — in particular, enabling the increasing share of educated women to work -and better education outcomes will increase in importance as global talent shortages loom on the horizon and the country attempts to diversify its economy, which will require a more skilled and educated workforce."
It said: "Last but not least, although some progress has been recorded recently, the use of the latest technologies can be enhanced further (41st), especially as this is an area where Saudi Arabia continues to trail other Gulf economies."
The Global Competitiveness Report 2013-2014 has been released at a time when the world economy is undergoing significant shifts.
Fahad Alturki, head of research at Jadwa Investment, commented: "Saudi Arabia is ranked well in the global competitiveness index with a stable macroeconomic environment that has proven very resilient during the global economic crisis and is supported by accommodative, sound fiscal and monetary policies, though there is still room for improvement."
He added: "For the Kingdom to advance in GCI there should be more progress on improving the quality of human resources, cutting red tape, improving regulatory environment and diversifying the economy further."
The Global Competitiveness Index places Switzerland at the top of the ranking for the fifth year running.
Singapore and Finland remain in second and third positions respectively.
Germany moves up two places (4th) and the United States reverses a four-year downward trend, climbing two places to fifth.
Hong Kong (7th) and Japan (9th) also closed the gap on the most competitive economies, while Sweden (6th), the Netherlands (8th) and the UK (10th) fell.
The report said Qatar's strong performance in terms of competitiveness rests on solid foundations made up of a high-quality institutional framework (4th), a stable macroeconomic environment (6th), and an efficient goods market (3rd).
The UAE moved up in the rankings to take second place in the region at 19th.
The country has also been aggressive at adopting technologies and in particular using ICTs, which contributes to enhancing the country's productivity, according to the report.
Reacting to these observations, Fawaz H. Al-Fawaz, a Riyadh-based economic consultant, said: "The Saudi economy is larger than these countries. Hence there are enough special interests to pursue while in the UAE and Qatar the economies are smaller. Their size forced them to be more open internationally. Hence the choice to be open internationally — hence more competitiveness. In my view, there is always convergence between the domestic competitiveness and that of competitiveness among countries."
But, he stressed: "Saudi Arabia can only be competitive internationally if it breaks all kind of oligopolies and special interests in all economic spaces."