Malta has slid by an overall five places in this year’s Global Competitiveness Index published yesterday by the World Economic Forum. It has been ranked in 56th place out of 131 countries in the 2007-2008 edition of the annual index.

This year’s index has been extended from 125 to 131 countries and, going by a comparison with countries included in last year’s index, Malta had dropped by only two spots.

Malta had jumped ahead by five places last year, but this year surrendered some of the ground won last year.

Among the EU27, Malta’s competitiveness was ranked in a paltry 24th place and outperformed only Greece (65th), and EU newcomers Romania (74th) and Bulgaria (79th).

Of the 12 pillars used to gauge countries’ competitiveness, Malta fared best in the sophistication of its financial markets, where it was ranked 20th in the world, followed by the quality of its institutions (31st) and the country’s technological readiness (32nd).

On the other side of the equation, Malta scored 103rd in terms of the efficiency of its labour market, 66th for macroeconomic stability, 62nd in innovation and 60th for the sophistication of the country’s businesses.

Among the most problematic factors associated with doing business in Malta, following a survey of the country’s business leaders, the overwhelming majority at 24.1 per cent, cited inefficient government bureaucracy. A further 12.7 per cent listed tax rates, 11.4 per cent cited an inadequate supply of infrastructure, which was followed – all in the eight per cent region – by restrictive labour regulations, poor work ethics in the national labour force, an inadequately educated workforce and access to financing.

Corruption and political instability, meanwhile, were not among business leaders’ concerns with just two and 2.3 per cent respectively citing the areas as being problematic.

While the top spots in this year’s competitiveness index were held by the United States and Switzerland, European Union countries occupied six of the top 10 posts. Denmark, in the world’s third place, was the EU’s best performer followed by Sweden fourth, Germany fifth, Finland sixth, the UK ninth, and Holland in 10th. Cyprus, an EU10 member state regularly compared with Malta, was ranked just behind Malta in 55th place.

Chile was the highest ranked country from Latin America, followed by Mexico and Costa Rica. China and India, meanwhile, continued to lead the way among large developing economies.

Several countries in the Middle East and North Africa region are in the upper half of the rankings, led by Israel, Kuwait, Qatar, Tunisia, Saudi Arabia and the United Arab Emirates. In sub-Saharan Africa, only South Africa and Mauritius feature in the top half of the rankings, with several countries from the region positioned at the very bottom.

“The United States confirms its position as the most competitive economy in the world,” Xavier Sala-i-Martin, Professor of Economics at Columbia University and Co-Editor of the Report, stated. The efficiency of the country’s markets, the sophistication of its business community and the impressive capacity for technological innovation that exist, within a first-rate system of universities and research centres, all contribute to making the United States a highly competitive economy. However, some weaknesses, particularly related to macroeconomic imbalances, continue to present a risk to the country’s overall competitiveness potential, and to the global economy as a whole. This danger has most recently been demonstrated by the fallout and contagion caused by the country’s sub-prime mortgage crisis and the ensuing global credit crunch.”

The rankings are calculated from both publicly available data and the Executive Opinion Survey, a comprehensive annual survey conducted by the World Economic Forum, together with its network of Partner Institutes, which include leading research institutes and business organisations in the countries covered by the index.

This morning a business breakfast organised by The Malta Business Weekly will discuss the issue with Competitive Malta chief coordinator Adrian Said. The European Commission will, on Monday, issue its own competitiveness report.