Global Competitiveness rating of Ukraine has returned to 2007 level


According to the recently published Global Competitiveness Report 2012, Ukraine has improved its overall rating by 9 positions, and is now at 73 place, which does not differ much from its pre-crisis level of 2007-2008 (73 and 72 place respectively). The country has scored the same 4.1 points as in 2008. Thus, we can assume that the impact of  2008-2009 crisis is generally over.

On the part of government policy, it was mainly due to improved macroeconomic indicators, the budget deficit and inflation (remember, that the data for previous year is counted). Port and airports infrastructure has markedly improved, but respondents did not notice any positive changes in road infrastructure. Losses related to terrorism and crimes have been reduced. Despite the lack of progress in objective indicators, respondents have noted the decrease in the impact of TB and HIV on business – perhaps because these already minor problems have fallen into the background compared to the more urgent ones.

In most cases, advance of Ukraine’s position in the ranking is associated with business development. Namely, we have improved attitude of companies towards their customers, the quality and availability of local suppliers, and a certain increase of competition – although the level of the latter is lagging far beyond the one of 2008, and the effectiveness of antitrust policy in Ukraine has fallen since then from 96-th to 132 place. Despite the crisis, some positive trends, such as deepening of industrial chains, continued throughout this period.

At the same time, position of the country is steadily deteriorating in everything that concerns the protection of property rights, the effectiveness of the legal system, the complexity of a particular regulatory policy and taxation, the effectiveness of corporate governance and protection of minority shareholders, and so on. Despite the large number of university graduates, the quality of education, especially management studies, and the availability of local opportunities for training are also worsening, as evaluated by the respondents. Confidence in banks has significantly decreased.

Although availability of credit had slightly increased for last year, the access to finance is in the first place among the obstacles to domestic business. Overall, corruption and tax administration are still leading in this rating with a noticeable margin.

September 5, 2012