After the lowering of Tunisia’s sovereign debt ratings by such agencies as S & P’s and Moody’s, the downgrading of the Banking Industry Country Risk Assessment (BICRA) and of the largest Tunisian banks and companies, the Global Competitiveness Index developed by the World Economic Forum (WEF) was published Wednesday.
This ranking is the largest mirror of the state of health of an economy and is the base reference of investors.
The ranking of a country is a kind of business card or window that allows (or not) to gain the confidence of investors and donors. The 2012-2013 ranking published Wednesday simply and flatly excluded Tunisia, citing as justification the lack of clarity in the data and the inability to compare with previous years. Tunisia joins the list of countries where it is impossible to give a clear picture of the situation of economic competitiveness like Sudan, Angola and Somalia.
Note that Tunisia was ranked 32nd in 2010 and 40th in 2011 out of 141 countries.
The degradation by 8 points in 2011 was justified by disruptions caused by the revolution. The fact of being excluded today is a very negative sign given to the world and a disaster that will take years to overcome.
It is obvious that the state of our economy and the opportunities it shows in the medium term are likely to sow doubt and therefore we will enter into a vicious circle that cannot be overcome unless we change the gear ratio, mobilize skills and focus on the economic progress which this government seems to ignore altogether or at least do not know how to approach it.
To help you understand what this ranking means and the negative implications of the failure to appear in it, it is necessary, first, to know what the notion of a country’s competitiveness is, according to the WEF.
“We define competitiveness as the set of institutions, policies and factors that determine the level of productivity of a country. The level of productivity, in turn, determines the sustainable level of prosperity that can benefit an economy.”
In other words, more competitive economies are able to produce higher levels of income for their citizens and improve the living conditions of the population through improved productivity and not only thanks to a favorable result of the commercial balance.
To measure this index, the method is to evaluate 110 criteria organized into 12 Pillars: basic requirements: 43 criteria covering mainly: Institutions: business law, the legal system, security and public and private good governance.
Infrastructure: transport, communication, electricity, water, gas…
Macroeconomic stability: public finance, savings, inflation, interest rates
Health systems and education: index of major epidemics, infant mortality, life expectancy, school enrollment, years of schooling
Factors of efficiency: 51 criteria covering:
Secondary, higher and continuing education: quantity and quality of training system, goods market efficiency: competition, tax burden on businesses, international openness, efficiency of the labor market in terms of flexibility, level of payroll, productivity, learning, employment of women.
Development of the financial market freedom, investment protection, and transparency of the system, the ability to integrate technology: firm-level technology absorption and access to information technology (ICT).
The market size domestic demand and export capacity
Innovation and development level factors: 16 criteria covering:
Development of the economic fabric: presence of local partners, cluster management and quality
Innovation: capacity for innovation, level of R & D investment, protection of intellectual property.
Going through this list, it is easy to see that this evaluation is in fact a complete assessment of the economic policy of a country and its prospects as well as the efforts by the government to put the country on the path of development.
The fact of not being able to accurately diagnose these criteria, when it was possible to do so last year, gives us a more accurate idea on the inability of the government to define its development policy and to make clear its priorities, action plans and track progress.
We are losing time and it will be hard to make up for it. A wind of change have to be blown as soon as possible before this country moves out into negative growth and lack of transparency and thus kill any hope that we have placed in the revolution.