Mongolia is 2nd least competitive country, says new study
- By Dulguun Bayarsaikhan -
- Jun 20,2019
Mongolia has been stuck in 62nd place out of 63 countries in the annual competitiveness rankings compiled by International Institute for Management Development (IMD).
Economists regard competitiveness as vital for the long-term health of a country’s economy as it empowers businesses to achieve sustainable growth, generate jobs and, ultimately, enhance the welfare of the public.
The IMD World Competitiveness Rankings, established in 1989, incorporate 235 indicators from each of the 63 ranked economies. The ranking takes into account a wide range of “hard” statistics such as unemployment, GDP and government spending on health and education, as well as “soft” data from an Executive Opinion Survey covering topics such as social cohesion, globalization and corruption.
This information feeds into four categories – economic performance, infrastructure, government efficiency and business efficiency – to give a final score for each country. There is no one-size-fits-all solution for competitiveness, but the best performing countries tend to score well across all four categories.
Singapore toppled Hong Kong and the USA to take the top spot in the competitiveness chart. Singapore ranked first place in the IMD World Competitiveness Rankings for the first time in nine years. Last year, it stood at third place.
Venezuela remains anchored to the bottom of the ranking, hit by inflation, poor access to credit and a weak economy. Mongolia is ranked just above Venezuela despite hitting its lowest overall competitiveness score since 2015. The Central Asian country ranked 57th with 47.1 points in 2015, stood at 60th with 45.7 points, fell to 62nd with 48.1 points, and remained at 62nd with 52.6 and 45.1 points in 2018 and 2019 respectively.
The highest rank Mongolia earned in the four main categories was 58th for economic performance.
Why did the competitiveness score drop?
Over the past year, Mongolia achieved the highest improvement in terms of research development cost, fiscal deficit and revenue from the stock market, trade, exportation and tourism. However, performed badly in terms of price index, current account balance, transparency, and pension fund, which mainly attributed to Mongolia’s lower competitiveness score.
In addition, the Economic Policy and Competitiveness Research Center evaluated that degradation in employment, business environment, labor market, health, environment and education also caused the 7.5 point decline.
Challenges in 2019
- Impending foreign debt repayments may pose some risks for the growing economy.
- Upcoming Parliamentary election may result in political instability and policy discontinuity.
- Foreign direct investment may decrease due to election.
- Inflation may increase due to high domestic demand resulting from increased government expenditure.
- Social and economic costs of severe air and soil pollution levels in urban areas are posing considerable challenges for the country.