The tragic story of our declining competitiveness

In the most recent ranking of the World Economic forum, which compares the competitiveness of 140 countries around the world, Slovakia ranked 67th. Since we ranked 8 places higher the year before, the media presented this as positive news. If we, however, look at the long-term evolution of the Slovak economy’s competitiveness not only in this, but in other rankings, we realize that the picture we are looking at is drastically different. It is a literally tragic story of a dramatic decline in our competitiveness.

In 2000, we ranked 38th, and in 2010 we fell to 60th, while today we stand at the aforementioned 67th place. Although the year-on change is interesting for the media, it does not provide us with almost any vital information. If we really want to know how we are doing in terms of competitiveness, we have to look at a longer-term evolution of Slovakia’s place in all available rankings.

Probably the most renowned is the World Bank’s Doing Business, which includes the Paying Taxes ranking. The Swiss IMD also ranks competitiveness, and indexes of economic freedom, published by the Fraser institute and the Heritage Foundation, are indicators of competitiveness as well. If we take a look at the evolution of Slovakia’s standing for the last 10 years, we come to the conclusion that there has been a significant drop in the ranking of our competitiveness. While 10 years ago we usually ranked in the top third or quarter of the ranked countries, today we usually rank in the bottom half, in most cases also last among the V4 countries and also similarly in the reduced ranking of EU countries, which are the most fitting sample to compare with.

An explanation to this negative trend is offered in two parts: Other countries have been improving while our business environment has been worsening, or we have been stagnating at best. Even though every Slovak government in the last 10 years had improvements of the entrepreneurial environment in its program, the current actually has ambitions to rank among the Top 20 countries in Doing Business, in reality we have witnessed the very opposite happening. The current government finds pleasure in using selective actions, but previous governments, who had also declared they were determined to cancel or refuse new measures and benefits only targeting chosen groups, had also failed to deliver any positive change.

Entrepreneurs rightfully feel that while the state only keeps increasing their taxes, obligations, and the endless bureaucracy, it is clearing the path to others with investment incentives (foreign investors), or saves them if they are big enough (previously banks, now Váhostav). The small businesses are too unimportant for such measures Is there ever going to be a government that will consider one of its top priorities to fundamentally simplify conditions for entrepreneurship, decrease the level of bureaucracy, and actually execute them in reality? There have been numerous examples globally, which have shown that it is indeed possible to do in a relatively short period of time. After all, even in Slovakia did it successfully between 1999 and 2005.

Author: Ján Oravec

Translation: Robert Cesar

Pridaj komentár

Categorized: Articles