Nepal less competitive economy in South Asia

Nepal still is the third competitive economy in the South Asia after India, Sri Lanka snd Bangladesh, though with 51.9 score, Nepal has stepped up by one rank – to to 108 – from last year, in the Global Competitiveness Index 2019. Nepal ranked at 109 with 50.8 score in the Global Competitiveness Index 2018.
Nepal was the 109th most competitive nation in the world out of 140 countries ranked in the 2018 edition of the Global Competitiveness Report. Competitiveness rank in Nepal averaged 115.42 in a decade – from 2007 until 2018 – reaching an all time high of 130 in 2011 and a record low of 100 in 2016.
Likewise, In South Asia, India ranks in 68th followed by Sri Lanka (the most improved country in the region at 84th), Bangladesh (105th), Bhutan (82-2018 ), Nepal (108th) and Pakistan (110th). India has moved down 10 places to rank 68th on an annual global competitiveness index, largely due to improvements witnessed by several other economies, while Singapore has replaced the US as the world's most competitive economy.
Despite recording three successive years of high economic growth, macro-economic stability and average annual gross domestic product growth of 4 per cent in the past decade, Nepal ranks 108th out of 141 economies and is the worst performer in South Asian region in terms of competitiveness, the report by the World Economic Forum (WEF) revealed. The annual assessment report, Global Competitive Report 2019 published today measures national competitiveness based on the state of institutions, policies and factors that determine an economy’s productivity.
Out of the total competitiveness score of 100 or the ‘frontier’ where productivity constraints cease to exist, Nepal has gained 51.6 points – far below India (68th) with 61.4 points and Srilanka (84th) with 57.1 points – and the global average of 60 points.
The economy performed poorly in terms of innovation capability, information, communication and technology adoption, product market development, judicial independence and government’s long-term vision, iut reads, adding that Nepal has performed better in indicators such as macro-economic stability, road connectivity, electricity access and supply, despite its low rank.
The report appears amid fears of slowing economic growth in Nepal owing to a drop in manufacturing and foreign direct investment, despite government claims that it has improved the investment climate by reforming over a dozen laws in a year. Figures show that the country's investment outlook has remained bleak despite political and macroeconomic stability. According to the central bank, the inflow of foreign investment plummeted by 25 per cent to Rs 13.07 billion in the last fiscal year from Rs 17.5 billion in 2017-18. Likewise, industry registrations fell to 436 in the last fiscal year from 498 in the previous year, the total committed investment dropped to Rs 282 billion from Rs 350 billion in the previous year, and foreign direct investment (FDI) pledges also nosedived to Rs 24 billion from Rs 56 billion, according to the Department of Industry.
The 2019 index that offers insight into economic prospects ranks 141 economies accounting for 99 per cent of the world’s GDP based on 103 factors of productivity related to 12 pillars of infrastructure, institutions, ICT adoption, macroeconomic stability, health, skills, product market, labour market, financial system, market size, business dynamism, innovation and capability.
According to the World Economic Forum, the report demonstrates that despite central banks injecting nearly $10 trillion into the global economy 10 years on from the financial crisis, productivity-enhancing investments such as new infrastructure, research and development and skills development in the current and future workforce have been suboptimal.
“The global economy is ill-prepared for a downturn after a lost decade for productivity-enhancing measures,” the report reads, adding that monetary policy may have run out of steam and some countries are facing a liquidity trap. “Furthermore, the geopolitical context is more challenging than in 2007, with gridlock in the international governance system, and an escalating trade and geopolitical tensions fuelling uncertainty, which holds back investments, and increases the risk of supply shocks.”
According to the report, Asia-Pacific is the most competitive region in the world with Singapore as the most competitive economy, followed closely by economies in Europe and North America and Nordic countries are among the world’s most technologically advanced, innovative and dynamic while also providing better living conditions and social protection.
With a score of 84.8 out of 100, Singapore is the country closest to the frontier of competitiveness
Other G20 economies in the top 10 include the United States (2nd), Japan (6th), Germany (7th) and the United Kingdom (9th) while Argentina (83rd, down two places) is the lowest ranked among G20 countries
The Global Competitiveness Report 2019: How to end a lost decade of productivity growth paints a gloomy picture, yet it also shows that those countries with a holistic approach to socio-economic challenges, look set to get ahead in the race to the frontier.
Persistent weaknesses in the drivers of productivity growth are among the principal culprits. In advanced, emerging and developing economies, productivity growth started slowing in 2000 and decelerated further after the crisis. Between 2011 and 2016, ‘total factor productivity growth’ – or the combined growth of inputs, like resources and labour, and outputs – grew by 0.3 per cent in advanced economies and 1.3 per cent in emerging and developing economies.

Nepal retains fourth competitive position in South Asia

Though Nepal has improved its competitiveness by 10 ranks to 88 -- out of 137 economies -- from last year's 98, it has retained the regional rank as the fourth most competitive economy in South Asia, according to Global Competitiveness Report 2017-18 published by World Economic Forum (WEF) globally today.
India (40), Bhutan (82) and Sri Lanka (85) are ahead of Nepal, while Pakistan and Bangladesh are behind in terms of regional ranking, the report reads, adding that Bangladesh ranks at 99 and Pakistan ranks 115.
Nepal slipped from the third most lucrative investment destination in South Asia in 2015-16 to the fourth last year. Nepal this year also couldnot improve the regional ranking from last year.
Nepal scored 4 points -- out of 7 -- and ranked 88th among 137 economies in the world, reveals the Global Competitiveness Index (GCI) 2017-2018, whereas Nepal had scored 3.87 points and ranked 98th among 138 economies in the GCI 2016-2017.
The Global Competitiveness Report 2017-18 also revealed that Nepal managed to advance its ranking in the GCI every subsequent year since 2012-13. Nepal has improved its scores across all pillars of competitiveness except Business Sophistication and Innovation Pillers that are key to advance economies.
However, government instability tops the most problematic factors for doing business in Nepal. It is followed by inefficient government bureaucracy, inadequate supply of infrastructure, policy instability, corruption, access to finance and poor work ethics.
The report also reads that ‘upgrading ICT infrastructure and increasing ICT use remain among the biggest challenges for the South Asia region’. According to the report, over the past decade, South Asia has been the area where technological readiness stagnated the most, with a performance similar to that of Sub-Saharan Africa.
Overall, the report highlights that 10 years on from global financial crisis, prospects for a sustained economic recovery remain at risk due to a widespread failure on part of leaders and policymakers to put in place reforms necessary to underpin competitiveness and bring about much-needed increases in productivity.
The results show growth is starting to recover, but still is insufficient to provide foundations needed for continued reductions in poverty and broad-based improvements in the quality of life of the many.
With emerging markets having a greater participation in global production and growth, progress in competitiveness among the large growing economies of Asia, Africa, and Latin America will be fundamental to the ability to provide a new boost to global growth.
Globally, Switzerland continued to top the overall rankings, with strong results evenly balanced across the different components of competitiveness. The United States improved a spot to rank at second overall this year. Singapore at third position (down by one) posted ‘an excellent performance across the board’. The Netherlands, at fourth, maintained its position. Similarly, Germany remained in the fifth position as last year, while slightly increasing its overall score.
There are three sub-indices in the competitiveness report -- basic requirements, efficiency enhancers, and Innovation and sophistication factors. 

Nepal's competitiveness eroding

Though Nepal has improved its competitiveness by a notch, it has lost its rank as the third most competitive economy in South Asia, according to Global Competitiveness Report 2016-17 published by World Economic Forum (WEF).
Nepal scored 3.87 points and ranked 98th among 138 economies in the world, reveals the Global Competitiveness Index (GCI). The country was at the 100th position among 140 countries last year.
In South Asia, India leads the chart with global ranking of 39, followed by Sri Lanka (71) and Bhutan (97), whereas Nepal slipped to fourth most competitive economy from last year's third most competitive economy. The GCI has ranked Bangladesh and Pakistan at 106th and 122nd position, respectively.
However, the country boasts the best macroeconomic environment in South Asia, and after significant recent improvement, the second highest level of health and primary education, according to the report.
But Nepal is the worst performer in terms of infrastructure. "The quality of infrastructure in Nepal has stalled," the report added.
Nepal is still under the factor-driven economies or Stage 1, which has 35 countries.
There are three sub-indices in the competitiveness report; Basic Requirements, Efficiency Enhancers, and Innovation and Sophistication factors. Nepal is ranked 98th in both Basic Requirements and Efficiency Enhancers sub-indices, while it is at the 127th position in Innovation and Sophistication sub-index.
Likewise, there are 12 pillars under the three sub-indices. Under Basic Requirements sub-index, Nepal ranks 100th with a score of 3.50 in Institutions, 130th in Infrastructure with a score of 2.16, 27th in macroeconomic environment with a score of 5.54, and 82nd in Health and Primary Education pillar scoring 5.56.
Similarly, under Efficiency Enhancer sub-index, Nepal ranks 113th with a score of 3.26 in Higher Education and Trainings, 116th with 3.90 score in Goods Market Efficiency, 103rd with 3.86 score in Labour Market Efficiency, 73rd with 3.91 score in Financial Market Development, 126th with 2.56 score in Technological Readiness, and 91st with 3.24 score in Market Size pillars, according to the report.
"Among 138 economies, Nepal ranks 124th with 3.25 score in Business Sophistication and 126th with 2.63 score in Innovation pillar under the Innovation and Sophistication sub-index," it added.
In the Global Competitiveness Report 2015-2016, Nepal was ranked 100th, with a score of 3.9, among 140 economies in the world. Likewise, with a score of 3.8, Nepal was ranked 102nd in the Global Competitiveness Report 2014-2015, among 144 economies.
The report also highlighted government instability, inadequate supply of infrastructure, corruption, inefficient government bureaucracy and policy instability as the most problematic factors in doing business in Nepal.
According to the report, Switzerland is the most competitive economy, followed by Singapore and United States.

Nepal 3rd most competitive economy in South Asia

Nepal has improved its score in Global Competitiveness Index (GCI), becoming third most competitive economy in South Asia, according to a report.
According to the Global Competitiveness Report 2015-2016 published globally today by World Economic Forum, Nepal ranked 100 – with a score of 3.9 – among 140 economies in the world. With improved score, Nepal is the third most competitive counry for investment in South Asia. The more the score – measured from 1 to 7 – the more competitive is the economy.
With score of 3.8, Nepal was ranked 102 in the Global Competitiveness Report 2014-2015, among 144 economies in the world, the report said, adding that the macroeconomic environment, and health and education – two of the 12 pillars that gauge the competitiveness of the economy – have improved. "Nepal ranks among the factor-driven countries," said country coordinator for the report Prof Dr Ramesh Chandra Chitrakar.
India (55) is the most competitive economy followed by Sri Lanka (68) and Nepal (100) in South Asia. Bhutan ranks 105, Bangladesh is in 107th position and Pakistan ranks 126 in the index.
The set of institutions, policies, and factors determine the level of productivity of a country. The level of productivity, in turn, sets the level of prosperity that can be earned by an economy, Chitrakar added.
The ranking – based on the assessment of 140 economies on parameters such as infrastructure and institutions, macroeconomic environment, health and education, among others – claimed that quality of Nepal's institutions has also improved apart from macro-economic environment, health and education.
However, Nepal needs to improve its technological readiness and efficiency enhancers to graduate to the efficiency-driven economy from current-factor driven economy, he said, adding that the graduation of Nepal to developing country by 2022 will also be determined by the increased competence. "The report encourages the government to fix policy, institutions, and factors to make the economy more competitive or productive that can propel economic growth."
Switzerland, Singapore and the US are the top three ranked economies, unchanged from the previous year, according to the report. Three Asian countries – Singapore, Japan and Hong Kong – are in the top ten ranking of the report. Likewise, in Asia, Malaysia ranked 18th, up two places, Indonesia ranked 37th, down three notches, while Thailand ranked 32nd, down one position.
The report also stated that emerging and developing Asia is the world's fastest-growing region since 2005 but it will retain for medium term. "The region accounts for some 30 per cent of global GDP, with China alone accounting for 16 per cent," it reported, adding that ASEAN bloc is performing well, but no countries in SAARC is above the rank of 50.

Nepal improves competitiveness ranking

Though, the lengthening political transition has dampened the hopes of investors, the country has improved its competitive raking.

Nepal has improved its global competitiveness ranking to 117th position – with a score of 3.66 out of seven – out of 148 economies, the according to the Global Competitiveness Index 2013-14 (GCI) published today by World Economic Forum (WEF).

Lat year the country was ranked 125^th among the 144 economies. Compared to the last year’s economies only that 144, Nepal ranks 114 this year, revealed the Global Competitiveness Index (GCI) – also a barometer for the investors to gauge the investment climate of individual countries – that is measured on 12 categories of economic competitiveness.

The ranking calculated on the basis of 12 categories – institutions, infrastructure, macroeconomic environment, health and primary education, higher education and training, goods market efficiency, labour market efficiency, financial market development, technological readiness, market size, business sophistication and innovation – are further divided into 112 sub-indicators to map the competitiveness of a country.

Nepal has improved only in three – macroeconomic environment, health and primary education and financial market development – of the 12 pillars.

The improvement in the three pillars will however not help sustain the competitiveness ranking without visible improvements in key sectors like infrastructure, labour market efficiency, technological readiness and business sophistication and innovation.

Of the 148 economies, Nepal ranks 144^th in infrastructure, whereas it is ranked 146th in cooperation in labour-employer relations under the labour market efficiency pillar.

Likewise, the country ranks 125^th in hiring and firing practices, down from last year’s 105^th as the government-labour organisations and private sector are still not able to agree on hire and fire opposed by the hardliner communists political parties.

The global report has also identified government instability as one of the most problematic factors for doing business in Nepal, followed by corruption and inefficient government bureaucracy.

Similarly, the GCI also revealed that public trust in the politicians is at its lowest as the country ranks 142^nd in public trust of politicians.

The index also revealed government spending as one of the waste as Nepal is in the 105^th position in the wastefulness in government spending.

As always, the private sector still feels legal framework for settling business disputes insufficient and worsened, as the country is positioned at 123^rd in the efficiency of the legal framework in settling disputes from last year’s 113 last year.

The report revealed that India (60), Sri Lanka (65), Bhutan (109) and Bangladesh (110) are more competitive economies – than Nepal – in South Asia, whereas Pakistan (133) trails behind Nepal.

Likewise, Switzerland with 5.67 score is the world's most competitive country, according to WEF Global Competitiveness Report 2013-14, followed by Singapore (5.61), Finland (5.54), Germany (5.51), and US (5.48).

The report also revealed that the US was able to reverse its four-year downward trend, rising by two positions to take fifth place this year overtaking the Netherlands and Sweden.

China is ranked 29th, leading the five BRICS – Brazil, Russia, India China and South Africa – economies, whereas Chad (148), Guinea (147), and Burundi (146) are the least competitive economies among the 148 listed in the index represents a comprehensive tool that measures the micro-economic and macro-economic foundations of national competitiveness.