The World Economic Forum is an International Organisation aimed at improving the state of the world by engaging business, political, academic and other leaders of society to shape global, regional and industry agendas.
The World Economic Forum recently issued the Global Competitiveness Report for 2013-2014. ‘Competitiveness’ is defined as the set of institutions, policies and factors that determine the level of productivity of a country. The level of productivity, in turn, determines the level of prosperity that can be reached by an economy. It is made up of twelve pillars:
1. Institutions: The institutional environment is determined by the legal and administrative framework within which individuals, firms and governments interact to generate wealth. Government attitudes towards markets and freedoms and the efficiency of its operations are also very important.
2. Infrastructure: Efficient infrastructure is important to ensure the effective functioning of the economy, since it is an important factor in determining the location of the economic activity and the kinds of activities or sectors that can develop within a country. Well developed infrastructure reduces the effect of distance between regions, impacts economic growth and reduces income inequalities and poverty.
3. Macroeconomic Environment: The stability of the macroeconomic environment is of vital importance. Though it cannot, alone, increase the productivity of the country, it is recognized that macroeconomic disarray harms the economy.
4. Health and Primary Education: A healthy workforce is vital to a country’s competitiveness and productivity. Poor health leads to significant costs to business. Moreover, the basic education received increases the efficiency of the workforce.
5. Higher Education and Training: Higher education and training is vital for economies that want to move up the value chain beyond the simple production processes and products. Economies must nurture well-educated workers who are able to perform complex tasks and adapt to the changing environment.
6. Goods Market Efficiency: Countries with efficient goods markets are in a good position to have the right mix of products and services and to ensure that these goods can be effectively traded in the economy.
7. Labour Market Efficiency: This ensures that workers are allocated to their most effective use in the economy and provided with incentives to give their best on the job.
8. Financial Market Development: An efficient financial sector allocates the resources saved by a nation’s citizens, and foreign imports, to their most productive uses. It channels resources to those projects with the highest expected rates of return.
9. Technological readiness: In today’s World, technology is vital for a firm to remain competitive. This pillar measures the agility with which an economy adopts existing technologies to enhance efficiency and productivity.
10. Market Size: Large markets allow firms to exploit economies of scale.
11. Business Sophistication: Sophisticated business practices are conducive to higher efficiency in the production of goods and services. Business sophistication concerns the quality of the country’s overall business networks and the quality of individual firms’ operations and strategies.
12. Innovation: This may arise from technological and non-technological knowledge. Technological breakthroughs have been at the basis of many of the productivity gains that our economies have historically experienced.
When taking all of the above into consideration, Malta was ranked at number 41. When looking at the results of the report, it is clear that Malta excels in health and primary education and technological readiness. It also scores within the top 40 countries in the pillars of institutions, infrastructure, higher education and training, goods market efficiency, financial market development and business sophistication.