One rung down the ladder in the latest rankings from the World Economic Forum

Vlerick Leuven Gent Management School is the Belgian partner in these WEF rankings and is responsible for the survey of Belgium business leaders. These rankings are based on an extensive survey of 13607 business leaders in 139 countries combined with various objective data measuring the competitive strength of the countries.

The new ranking in the ‘Global Competitiveness Report 2010-2011’ of the World Economic Forum (WEF) demonstrates that Belgium is keeping a stable position in difficult times. Although we lost one position, data for the period 2006-2010 show that despite some oscillation we keep our place within the top 20, close to Austria and Luxembourg. This demonstrates the capability of Belgium to limit the effects of the crisis.
The loss of one position is also due to the unexpected leap forward of Qatar, that climbed up 5 positions to reach the 17th place.

This year Belgium was the 19th most competitive economy in the world. Therefore in the last 5 years it kept a steady position between the 20th place (in 2006 and 2007) and the 18th place reached in 2009.
Thanks to its excellent healthcare and primary education systems (worldwide 1st position, from the 3rd position of 2009) and an increasingly strong higher education and training system (worldwide 7th, one rung higher than in 2009) Belgium is ranked at number 19. The same can also be said for business sophistication, where Belgium kept a stable 11th position. It is interesting to note that Belgium moved up 9 rungs to the 13th position on the pillar ‘technological readiness’.
The dimensions where Belgium slightly lost positions were those related to goods market efficiency and innovation. The pillar measuring the quality of infrastructure is also steadily going down. Belgium needs to take care to ensure that the decline does not continue to avoid further loss of competitive edge.

As was the case for 2009, our primary neighbours are more competitive than us, with the exception of Luxembourg.
The extent and effect of the high tax burden together with the high level of Belgian Governments’ debt are the main causes of this, and continue to affect Belgium’s competitiveness. The low score on labour market efficiency has also ensured a decline in competitiveness. Finally, from a business leaders’ perspective, in 2010 the most problematic factors for doing business in Belgium were the restrictive labour regulations and the inefficient Government bureaucracy.

Changes at the top

Switzerland keeps it place at the top of the ranking. On the other hand the US moved to the 4th position, confirming the negative trend of the past years that brought it from a leading 1st position in 2008 to the 2nd position of 2009 and ending in a drop out from the top 3 this year.

Although macroeconomic stability has slightly improved in 2010 the US in still losing positions because of a lower score on business sophistication and financial market development. A reduced trust in institutions and a weaker health and primary education system also contribute to the loss of competitiveness. Access to financing keeps being the first problematic issue for business leaders, while inefficient government bureaucracy has become the second main cause of concern.

The Scandinavian model has maintained its position at the top well: Nordic countries are the top performers of this year, with Sweden taking over US’ 2nd place. This highlights the increasing importance of strong institutions as drivers of competitiveness.

Singapore keeps the 3rd position gained last year.

Our neighbours continue to be placed above us. Germany stands in 5th position, 2 up from last year. The Netherlands also climbed up two rungs placing itself in 8th. The United Kingdom is in 12th position this year, whilst France is in 15th place.
Other European countries are inverting the negative trend of last year, climbing up the rankings at the expenses of North American countries.

Belgium is not doing as well on a number of points, but it keeps a very high position in Health and primary education and has improved on a series of dimensions, like technological readiness. The ambition for the next few years should be to rise up to the top 10. Our goal should be to reach The Netherlands, which climbed up two positions to number 8 in 2010, especially thanks to its market efficiency.

Strong institutions drive competitiveness

Growing countries seem to be those with the strongest institutions. Switzerland maintained its first position not only thanks to its first-rate infrastructures but also thanks to an excellent institutional environment (from 8th to 7th position in 2010). The same can be said in regards to Sweden’s leap to the second position (where institutions are 2nd worldwide). In the US, the fall can be partially attributed to the weakening of public and private institutions (down 6 places to the 40th position).

Country	Ranking 2010-2011	Ranking 2009-2010	Change
Switzerland	1	1	=
Sweden	2	4	+
Singapore	3	3	=
United States	4	2	-
Germany	5	7	+
Japan	6	8	+
Netherlands	8	10	+
United Kingdom	12	13	+
France	15	16	-
Belgium	19	18	-
Luxembourg	20	21	+
China	27	29	+
India	51	49	-
Brazil	58	56	-