CAIRO: Egypt jumped 11 places to rank 70th in the Global Competitiveness Index (GCI), up from 81 in 2009.
However, the overall improvement was largely based on deteriorating conditions in other countries, according to the seventh annual Egyptian Competitiveness Report (ECR) titled “Green Egypt: A Vision for Tomorrow,”
The Egyptian National Competitiveness Council (ENCC) launched the report in a conference Monday, presenting its findings and discussing the main issues.
Trade Minister Rachid Mohamed Rachid, who inaugurated the conference, disagreed with the report’s conclusion, which attributed Egypt’s improved ranking to the poor performance of other countries.
“Egypt showed progress when other countries were struggling, this is a testament to the financial and economic development Egypt has shown in the years prior to the crisis,” Rachid said.
While the financial sectors of other countries suffered, Egypt was able to remain healthy during the crisis, the report said, due to regulatory reforms and improved supervision.
Egypt jumped 22 places in the financial market sophistication indicator.
The composite competitiveness raw score however has not improved since 2007, remained at 4. The score is ranged from 1-7 with 1 being the lowest competitiveness performance and 7 the highest.
According to the report, scores were lowest in the areas related to human development, labor markets and macroeconomic stability. In labor market efficiency, Egypt ranks 126 out of 133 countries; and in quality of education Egypt came in at 123.
Officials also discussed fiscal policies that should be utilized to improve Egypt’s competitiveness.
The report finds that although fiscal, monetary and other reforms taken by the government were generally effective, “the crisis strongly highlighted the vulnerabilities in Egypt’s macro-economy.”
To be addressed
The report recommends that Egypt tackle issues including “high inflation, high unemployment rates, weak shared growth, persistent poverty, high budget deficits and high level of public debt.”
“Egypt has made significant progress in a number of pillars including capital market development, infrastructure and technology readiness, which has resulted in the 11 place jump in the rankings,” said Malak Reda, senior economist at the Egyptian Center for Economics Studies in her presentation.
“There is still a need for further progress in several other areas. Reform is needed with regards to macro-economic stability, and development of human resources through improving the quality of education and health and raising the efficiency of the labor market is needed,” added Reda.
The most controversial argument was about the quality of fiscal spending. The report points out that too much government budget is allocated to operational salaries and poorly targeted subsidies and not enough is used for investment in human resources and infrastructure that can improve Egypt’s long term competitiveness and lower poverty.
Amina Ghanem, deputy minister for international relations in the Ministry of Finance, said, “Fiscal space must be found through the re-distribution of public spending between current salaries and subsidy bills and long term investment spending.”
“This could be done by finding new revenue streams without raising taxes and developing policies to support the medium-term competitiveness and the construction of the Egyptian growth engine,” added Ghanem.
“Most importantly, this requires the establishment of an institutional structure that coordinates the balance between current spending and investment spending so the budget allocated for investment is not just the remaining "residual" amount after all the salaries and subsidies have been paid,” Ghanem explained.
As the title suggests, the report also proposes a strategic framework for action to move to a green economy, building on Egypt’s potential strengths and giving concrete recommendations on the roles of the government, private sector, civil society and education and research institutions in this framework.
Rachid stressed the importance of Egypt following the new trend.
“Egypt’s limited resources, rising population, recent potential water scarcity issues and food security prioritization are reasons why Egypt should consider adapting to the new economic trends moving away from consuming huge amounts of energy and water to a more sustainable model,” Rachid added.
“The green revolution is what we need as it a solution to many current problems including the ongoing depletion of our non renewable energy resources and the shortage of water as well as being a potential source of employment opportunities,” explained Rachid.
Mona ElBaradei, executive director of the ENCC, said that through its discussion and recommendations with regards to Egypt’s transformation into a green economy and its focus on human development indicators and the policies which advance them, the ECR provides a “pathway to the future” for Egypt.
