Dubai: The UAE is ranked 17th in the global competitiveness ranking in World Economic Forum’s Global Competitiveness Report 2015-16.

The report is an annual assessment of the factors driving productivity and prosperity in 140 countries. In this year’s Global Competitiveness Index (GCI), Switzerland is ranked top with strong performance in all 12 pillars of the index. While Singapore remains in second place and the United States third. Germany improves by one place to fourth and the Netherlands returns to the fifth place it held three years ago.

Despite a decline in the overall global ranking this year, the report notes that the UAE has benefited from high levels of openness to trade and investment (fifth on foreign competition), which ensure intense competition and high levels of innovation. Its business environment is welcoming to investment and characterised by regulations that are easy to comply with, a fairly efficient labour market, and the presence of sophisticated businesses.

In terms of various competitiveness parameters, the UAE has higher ranking than countries such as Belgium, Australia, Austria, France, Ireland, South Korea, Malaysia and China.

Despite the fall in oil prices and its impact on economic activity in the country, the report observed that the country has an excellent macroeconomic environment, highly developed infrastructure, and strong institutions that provide a solid base, and the Emirati economy is significantly more diversified than other GCC countries.

Right direction

“The country will have to continue its gradual path of fiscal consolidation to ensure that its fiscal position remains strong despite the drop in oil prices; the recent decision to abolish energy subsidies is a step in the right direction. The UAE will also need to strengthen its capacity for innovation ranked 26th globally, including by upgrading scientific research,” the report said.

This year’s Global Competitiveness Index finds 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. But in many countries, too few people have access to high-quality education and training, and labour markets are not flexible enough.

The report also found a correlation between highly competitive countries and those that have either withstood the global economic crisis or made a swift recovery from it. The failure, particularly by emerging markets, to improve competitiveness since the recession suggests future shocks to the global economy could have deep and protracted consequences.