The WEF 12 Pillars of Competitiveness

The World Economic Forum  (WEF)  Global Competitiveness Report 2009-2010 ranks Switzerland as the most competitive economy in the World, Tunisia as the most competitive in Africa and South Africa as the most competitive in Sub Saharan Africa. The Report provides benchmarking tools for business leaders and policymakers to identify obstacles to improved competitiveness, thus stimulating discussion on strategies to overcome them.

WEF defines competitiveness as “the set of institutions, policies, and factors that determine the level of productivity of a country”. The level of productivity, in turn, sets the sustainable level of prosperity that can be earned by an economy.  In other words, more-competitive economies tend to be able to produce higher levels of income for their citizens. The productivity levels also determine the rates of return obtained by investments in an economy. Because the rates of return are the fundamental drivers of the growth rates in an economy, a more-competitive economy is one that is likely to grow faster in the medium to long run.

Since the determinants of competitiveness and the wealth of nations are many and complex, the WEF groups these determinants into 12 pillars which contribute to a nations competitiveness. These are:

Factor Driven 

1. Institutions

2. Infrastructure

3. Macroeconomic Stability

4. Health and Primary Education

Efficiency Enhancers

5. Higher Education and Training

6. Goods Market Efficiency

7. Labor Markets Efficiency

8. Financial market sophistication

9. Technological Readiness

10 Market Size

Innovation and Sophistication Factors

11. Business Sophistication

12. Innovation

The 12 pillars as shown above are then used to group economies into the 3 stages of competitive advancement which are: 1).  factor driven basic economies; 2).  efficiency driven economies and 3). innovation driven economies.

According to the Report, most Sub Saharan African countries are factor driven and still in the basic stage of development.  The challenges facing these countries include quality of institutions, infrastructure, macroeconomic stability, health and education.

Botswana, Egypt, Libya and Morocco are in transition from the factor driven stage to that of efficiency driven. 

Meanwhile, the Report finds that efficiency enhancers are Namibia, Mauritius, Tunisia and South Africa and the 4 countries are the most competitive African economies. The challenges facing these economies include Higher Education and Training; Goods Market Efficiency; Labour Market Efficiency; Financial Market Sophistication; Technological Readiness and Market Size.

For country by country analysis, the Africa Competitiveness Report 2009-2010 can be accessed here.