Belgium slips slightly in the World Economic Forum 2012 ranking - down two places

Results of the Global Competitiveness Report 2012-2013 of the World Economic Forum

As the Belgian partner in the annual WEF ranking of most competitive countries Vlerick Leuven Gent Management School is responsible for the survey of Belgian business managers. The ranking is based on an extensive survey of more than 14,000 business managers in 144 countries, combined with various objective data measuring each country’s competitive strength.

The World Economic Forum’s (WEF) ‘Global Competitiveness Report 2012-2013’ reveals that Belgium has slipped two places and is now ranked the 17th most competitive country in the world. Last year we jumped four places forward in one go, (from 19th to 15th position), the highest position Belgium has achieved in the last seven years. During this period Belgium fluctuated between 20th place (in 2006 and 2007), 18th place (2009) and 19th place (2010). We have also managed to continue to surpass France. Last year marked the first time that Belgium surpassed France, which this year continues to slip down the ladder, from 18th to 21st position. Belgium is however unable to close the gap with Germany (stable in 6th place) and the Netherlands (from 7th to 5th place). In 2012 Austria, which is ranked 16th, also just jumped ahead of us.

Leo Sleuwaegen, Professor at Vlerick Leuven Gent Management School, says: “The Global Competitiveness Index reflects the foundations of a country’s competitiveness and defines its capacity for growth. In that sense the gap with Germany and the Netherlands is a disadvantage and in the long term it will weaken our position in Europe.”

Belgium owes its competitive economy mainly to its excellent healthcare and its primary education: the country is ranked second worldwide for the latter. We also perform well in terms of higher education and training: this year Belgium moved up one rung in this category to 4th place. Another element which contributes to our competitiveness is our business sophistication in general. Although we slipped down one spot, Belgium is still ranked 12th worldwide. Belgium also performs well in terms of innovation with an ascent of four places up to number 11. This progress is largely due to the high quality of our scientific research institutions (ranked 4th worldwide) and the degree of R&D collaboration between universities and the industry (6th worldwide).

When it comes to the technological readiness category, we perform less well, sliding 11 places down the ladder (from 11 to 22). Two other factors which have affected our performance are labour market efficiency, where we lost ground (from 44th to 50th position) and the macro-economic climate (from 60th to 66th position). The damage is somewhat limited in terms of infrastructure (from 17th to 21st position) and financial market development (from 28 to 31).

Leo Sleuwaegen, professor at Vlerick Leuven Gent Management School, explains: “Belgium is lagging in terms of mobile broadband subscriptions – a new indicator this year – and that is the main reason for our strong decline in terms of technological readiness. This seems to be a temporary phenomenon however, because in recent years we have managed to significantly close the gap. In terms of our labour market the lack of flexibility when hiring or dismissing employees and the salary structure are the negative factors that stand out. This in turn is reflected in the negative relationship between pay & productivity. The high government debt and budgetary shortcomings play a very negative role in the decline of the macro-economic climate. The decline in terms of infrastructure is a source of concern as this used to be a competitive advantage for Belgium in the past.

Finally, if we look at the results from the perspective of businesses, then business in Belgium in 2012 is mainly hindered by high tax rates, the strict tax code and, in third place, the restrictive labour regulations. This year, the inefficient government bureaucracy did not make it into the top 3 of factors which complicate life for businesses operating in Belgium.

European framework

As was the case in 2011 the biggest neighbouring countries continue to be more competitive than we are. The Netherlands close the gap with Germany and makes its way up the ladder from 7th to 5th place. Germany remains in sixth place. The United Kingdom climbs up two rungs, to number eight. Although Luxembourg moves up one place to 22nd position, Belgium still manages to surpass it.

This year’s big surprise is France, which slides 3 rungs down the ladder to 21, continuing a trend given that the country already lost ground (3 places) last year. Spain is ranked 36th, Italy 42nd, Portugal 49th, and Greece is at the bottom end of the ranking, in 96th place (out of 144). This is largely due to the lack of a macro-economic balance, bad access to funding, a shrinking labour market and a lack of innovation.

Changes at the top

Switzerland maintained its first position for the fourth year in a row, while Singapore is once again ranked the second most competitive country worldwide. The Scandinavian countries continue to surpass other countries in the ranking but they tend to maintain their position at the top: Finland is 3rd, Sweden 4th, Denmark 12th and Norway 15th. The US falls for the fourth year running, from 5th place to 7th place, which can be partly attributed to their macro-economic climate but also to American business managers’ concerns about the institutions. Their trust in politicians is low and they feel the government is inefficient. The US continues to be the global leader in terms of innovation and they can also rely on an efficient market.

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