South Africa has once again slipped down the rankings in the World Economic Forum (WEF) Global Competitiveness Report 2014-2015, attaining the 56th position this year.
According to the report, this places it third among the BRICS economies.
The country has done well on measures of the quality of its institutions (36th), including intellectual property protection (22nd), property rights (20th), the efficiency of its legal framework in challenging and settling disputes (9th and 15th, respectively), and its top-notch accountability of private institutions (2nd).
In addition, the report points out that South Africa’s financial market development remains impressive at seventh place, “although our data point to more difficulties in all channels of obtaining finance this year”, it notes.
The country also has an efficient market for goods and services (32nd), the report continues, and it does reasonably well in more complex areas such as business sophistication (31st) and innovation (43rd), benefitting from good scientific research institutions (34th) and strong collaboration between universities and the business sector in innovation (31st).
South Africa’s transport infrastructure (32nd) is good by regional standards, the WEF points out, although its electricity supply does suffer disruptions (99th).
However, the report points out that South Africa’s strong ties to advanced economies, for instnce the euro area, has made it more vulnerable to the economic slowdown of those economies. ”These ties are likely to have contributed to the deterioration of fiscal indicators: its performance in the macroeconomic environment – having dropped sharply in the previous year – remains at 89th,” the report notes.
“Low scores for the diversion of public funds (96th), the perceived wastefulness of government spending (89th), and a more general lack of public trust in politicians (90th) remain worrisome, and security (95th) continues to be a major area of concern for doing business.”
The report also highlights challenges in building a skilled labour force and creating sufficient employment. Meanwhile, the health of the workforce is ranked 132nd out of 144 economies, mostly as a result of high rates of communicable diseases and poor health indicators more generally.
Worryingly, higher education and training remains insufficient (86th) while labour market efficiency (113th) is affected by extremely rigid hiring and firing practices (143rd), wage inflexibly (139th), and continuing significant tensions in labour-employer relations (144th).
“Raising education standards and making its labour market more efficient will thus be critical in view of the country’s high unemployment rate of over 20 percent, with its youth unemployment rate estimated at over 50%,” the report advises.
The Global Competitiveness Report 2014-2015 assesses the competitiveness landscape of 144 economies, providing insight into the drivers of their productivity and prosperity.