UAE The Most Competitive Arab Economy

by Lorys Charalambous, Tax-News.com, Cyprus

23 April 2007

The United Arab Emirates is the most competitive economy in the Arab world among the countries in the third and most advanced stage of development, according to The Arab World Competitiveness Report 2007, released by the World Economic Forum.

The WEF said that sound economic management in the UAE has contributed to stabilizing the macroeconomic environment and strengthening public institutions. However, it also noted that a lack of educational attainment, in particular at the primary and secondary levels, needs to be tackled on a priority basis, because an uneducated workforce could put current diversification efforts at risk.

The UAE is ranked 29th out of the 40 most advanced economies in the world.

This year’s report has expanded coverage to 13 Arab economies – Algeria, Bahrain, Egypt, Jordan, Kuwait, Libya, Mauritania, Morocco, Oman, Qatar, Syria, Tunisia and United Arab Emirates. Libya, Oman and Syria are assessed for the first time. Rankings are presented in three country groups according to their stage of development to enable benchmarking against peers in other parts of the world.

"Today, the Arab world is at a critical juncture," observed Klaus Schwab, Founder and Executive Chairman of the World Economic Forum. "Although the region’s economies are currently very dynamic and offer tremendous business opportunities, there is no doubt that improvements to national competitiveness and closer integration with the global economy and within the region are necessary if this growth momentum is to be sustained."

"The report underscores the importance of a profound change in mindsets to realize the region's full potential," noted Sherif El Diwany, Director, Middle East, World Economic Forum. "Entrepreneurship, an element that is often cited as the key to unlocking the potential of the Arab economies, can only take root in societies where freedom of thought, enthusiasm for inquiry and critical thinking are popular values. To that end, the pace at which the leaders of the region will address educational reform and the route that this reform will take are the determining factors when it comes to ushering in the productive power of Arab entrepreneurship. Diversification of Arab economies and improving business competitiveness are a direct function of education reform."

"The rankings highlight the diversity of Arab economies and the divergent performance in terms of national competitiveness," observed Margareta Drzeniek Hanouz, Senior Economist at the World Economic Forum’s Global Competitiveness Network and Co-Editor of the Arab World Competitiveness Report. "A closer look at the results reveals that although most countries have achieved significant progress with respect to their own past, many challenges remain to be addressed."

"The most important weaknesses are to be found in the areas of education, low efficiency of goods markets as well as labour markets and, for the more advanced economies the very weak innovative capacity," she added.

"The current situation provides an opportune moment for forging ahead with reforms to improve national competitiveness," stated Tarik Yousef, Dean, Dubai School of Government. Educational reform is a high priority in the region, given the high unemployment rates among educated youth. He added: "Educational outputs remain mismatched with the needs of the business sector, depriving the economies of the trained talent needed to raise productivity and move up the value chain. At the same time, high unemployment and labour force growth require that governments overhaul the regulation of labour markets that rely heavily on the public sector and migrant workers."

The WEF said that the Arab World Competitiveness Report series serves as a platform for public-private dialogue on issues related to competitiveness, as is being witnessed at the Arab World Competitiveness Roundtable in Doha. These high-level discussions use the findings of this report as a basis for competitiveness benchmarking and for advancing policy discussions.

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