Johannesburg - South Africa is Africa’s second most competitive economy behind Mauritius, despite a weak education and health care system, low trust in public officials and labour unrest. This is according to the Global Competitiveness Report (GCP) released yesterday by the World Economic Forum (WEF).
Globally, South Africa is ranked 47th, a two-place gain from last year, the second consecutive year of improvement and the highest position since 2010.
The report assessed the factors driving productivity and prosperity in 138 countries. The role of stimulus packages such as quantitative easing, technology and innovation in emerging markets were also considered.
South Africa’s competitiveness is anchored on the country’s financial markets; it is ranked 11th in the world, helped by being ranked number one for financing through local equity market.
Other notable attributes of the country’s competitiveness are its anti-monopoly policies, which was ranked 7th, and stronger local competition, which came in 30th.
The report said South Africa had improved in two crucial areas over the past year: goods market efficiency, up 10 to 28th, and labour market efficiency, up 10 to 97th).
In the labour market “the country is doing much better at linking pay to productivity”, the report said. Business sophistication and innovation in South Africa had improved
The report noted that areas of concern that weakened South Africa’s competitiveness were the country’s inflexible labour market and low public opinion of politicians.
The country is ranked 138th for labour-employee relations and 109th in public trust in politicians. Health and primary education are ranked a low 123rd, while higher education came in at 77th.
Lack of openness
The report said the lack of openness in the countries surveyed was detrimental to competitiveness.
“Our data suggests that the degree to which economies are open to international trade in goods and service has been declining for 10 years. This could hurt prosperity in the future,” the WEF said.
Klaus Schwab, an executive chairman of WEF, said the lack of openness was a stumbling block to world leaders in having economic inclusivity.
“Declining openness in the global economy is harming competitiveness and making it harder for leaders to drive sustainable, inclusive growth,” said Schwab.
Among the Brics countries, South Africa came in fourth position with China being the highest ranked Brics country - it was ranked 28th.
The GCP said a number of factors may limit South Africa's competitiveness going forward, especially in the areas of infrastructure, building strong institutions and low business confidence.
Switzerland has the distinction of being the most competitive economy in the world.
BUSINESS REPORT