DOHA, 11 April 2007 — The United Arab Emirates has the most competitive economy in the Arab world, according to The Arab World Competitiveness Report 2007, released yesterday by the World Economic Forum.
“The Emirates ranked first because of the highly developed infrastructure, particularly air and sea ports,” said Margareta Drzeniek Hanouz, an economist who co-authored the survey of 13 Arab states that the forum released at a two-day meeting of Arab business leaders in Qatar.
“The important contributor is the efficiency in government spending and government regulations as well as the efficiency in the labor market, due to a lot of imported labor,” Hanouz said of Emirates’ success.
But the Emirates is not the most competitive economy in the Middle East — a position occupied by Israel, according to the biennial survey.
Qatar is the second most competitive Arab economy. It took first place in the 2005 survey. And Kuwait is in third place.
In world terms, Emirates ranks 29th, just ahead of Portugal and behind Spain, and Israel is 15th.
Switzerland is the most competitive country in the world, with the United States in sixth place.
Most Arab economies have soared in the past five years despite the war in Iraq, the Israeli-Palestinian conflict, and the brief but ferocious battle in Lebanon last year. Many Arab countries are enjoying the fastest growth rates seen for 30 years, the report said.
The Gulf countries are the most advanced among the Arabs. Booming energy revenues have been paired with major overhauls in government policies that have made their economies far more competitive, said Simon Williams, an economist with the HSBC Bank in Dubai, who was commenting on the report.
“It’s not just the oil funds,” said Williams. “There is a recognition of the need to address shortfalls in everything from fiscal policy to infrastructure provision and education. Arab countries of the Gulf recognize they have a real historic opportunity which has to be seized now.”
The World Economic Forum said Egypt, Tunisia and Oman had grown more competitive because of progress in their infrastructure, education and labor markets.
The Arab world still has much to do, the experts said. Arab economies are still not integrated within the region and with the world beyond, said Forum chairman Klaus Schwab.
Co-author Hanouz said Arab states still suffer from substandard education, little flair for innovation and inefficient labor markets.
This year’s report assessed Libya, Oman and Syria for the first time.
Libya got good marks for using rising oil exports to run up one of the world’s widest budget surpluses. Oman won points for well-developed government institutions and efficient labor markets. And Syria was credited with low corruption and efficient infrastructure, but criticized for the sizes of its budget deficit and public debt.
Sherif El-Diwany, director of the Middle East chapter of the World Economic Forum, said the report underscored the importance of a profound change in mindsets in order to realize the region’s full potential. “Entrepreneurship, an element that is often cited as the key to unlocking the potential of the Arab economies, can only take root in societies where freedom of thought, enthusiasm for inquiry and critical thinking are popular values. To that end, the pace at which the leaders of the region will address educational reform and the route that this reform will take are the determining factors when it comes to ushering in the productive power of Arab entrepreneurship. Diversification of Arab economies and improving business competitiveness are a direct function of education reform.”
— Additional input from agencies
