“Robust improvement” reflects reforms of business environment, judiciary
Riyadh, Saudi Arabia (08 October 2008): Today the World Economic Forum recognized the Kingdom of Saudi Arabia among the Top 30 most competitive economies in its annual Global Competitiveness Report. Recent reforms in Saudi Arabia improved the Kingdom’s position from 35th to 27th out of 134 countries studied.
The report, which rates the determinants of economic productivity in each country, places Saudi Arabia at the forefront of the region, ahead of the United Arab Emirates (31st), Kuwait (35th) and Tunisia (36th), and just one place behind Qatar (26th). The Kingdom also ranks ahead of both advanced economies, such as Spain (29th) and Italy (49th), and fast-emerging markets, including China (30th), India (50th), Russia (51st) and Brazil (64th).
The World Economic Forum measures countries’ economies based on over 100 distinct variables, including data from its annual Executive Opinion Survey, which last year reached over 11,000 global business leaders. Saudi Arabia registered particularly strong improvements in a number of areas, including its innovation capacity, health and primary education systems, and the institutional framework for doing business.
The Kingdom’s steadily improving health and education systems gained twenty places in the rankings, to 51st, complementing improvements in its higher education and training systems. Meanwhile, the World Economic Forum credited reforms of Saudi Arabia’s commercial institutions for supporting significant gains in entrepreneurship.
The World Economic Forum recognized that, “notable advances have been achieved with respect to the institutional framework for doing business.”
“Our ranking in the World Economic Forum’s Global Competitiveness Index indicates Saudi Arabia’s increasing attractiveness to investors,” said Dr. Awwad Al-Awwad, Deputy Governor for Investment Affairs, Saudi Arabian General Investment Authority (SAGIA) and President of the National Competitiveness Center (NCC). He noted that the Kingdom is now the region’s largest foreign investment platform, having received over US$24 billion in inward foreign direct investment in 2007.
Saudi Arabia also saw improvements in the size and quality of its domestic goods markets, reflecting its success in liberalizing international trade, growing the economy and stimulating entrepreneurship and competition at home.
These improvements owe in large part to the deliberate efforts of Saudi Arabian efforts to enhance the competitiveness of the economy, in order to realize the vision of His Majesty King Abdullah, Custodian of the Two Holy Mosques, to foster greater prosperity for the people of Saudi Arabia. The King has been the country’s strongest advocate for modernizing the Saudi business environment. He has achieved dramatic gains in domestic and foreign investment in the country by enacting a new foreign investment law, establishing the Saudi Arabian General Investment Authority (SAGIA), gaining World Trade Organization membership, and pursuing an agenda of privatization and reform.
The Governor of SAGIA has since institutionalized efforts to liberalize the country’s economy with the creation of the National Competitiveness Center (NCC) and the “10 x 10” initiative. “Under His Majesty the King’s leadership, Saudi Arabia has acknowledged the importance of competitiveness and has set a goal for the Kingdom to become one of the top 10 most competitive countries in the world by 2010,” said H.E. Amr Al-Dabbagh, Governor of SAGIA.
The World Economic Forum called Saudi Arabia’s progress “robust,” and credited “the government’s determination to improve its performance on a number of competitiveness indicators under the ambitious 10x10 program.”
SAGIA uses the World Economic Forum’s Global Competitiveness Index as a crucial yardstick in measuring the Kingdom’s progress and envisioning further reforms. H.E. Amr al-Dabbagh calls the rankings “a vital reference” for evaluating Saudi Arabia’s competitiveness, “the most comprehensive assessment of a country’s economic strength and ability to yield high returns on investment.”
On this basis, reforms have been devised to consolidate the Kingdom’s competitive strengths and addressing areas of weakness. The government’s commitment to economic modernization has attracted global attention, contributing to Saudi Arabia’s emergence as the top recipient of foreign direct investment in the Middle East. Foreign direct investment inflows have increased by a factor of more than ten since 2004. Today, nearly two-thirds of these funds go to non-oil sectors of the economy.
In order to foster balanced development across the Kingdom, SAGIA has already launched four Economic Cities—in Rabigh (King Abdullah Economic City), Hail (Prince AbdulAziz bin Mousaed Economic City), Madinah (Knowledge Economic City) and Jazan (Jazan Economic City)—where foreign investors can enjoy 100% ownership and a regulatory regime that delivers world-class competitiveness.
The Kingdom’s unprecedented commitment to supporting advanced research and development activities drove an improvement of fifteen places in Saudi Arabia’s status as an innovation platform. At 34th, Saudi Arabia has surpassed advanced economies such as Portugal (35th), Spain (39th) and Russia (48th), and now competes with knowledge-intensive economies such as India (32nd) and China (28th).
Saudi Arabia’s bolstered position in the Global Competitive Index highlights the success of the government’s ambitious efforts and sets the agenda for further reform. To join the ranks of the world’s most advanced economies, SAGIA and the NCC will redouble their efforts to upgrade the Kingdom’s competitiveness.