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The latest Global Competitiveness Index rankings bore good news for Bangladesh, which rose up two places in the Global Competitiveness Index, going from 109 to 107. This ranking, which covers 140 countries, is backed up by a comprehensive assessment of the key factors that determine a country’s current and future prosperity.
While this is encouraging news for Bangladesh’s business and economic prospects, it is important to see the finer details of the Index to get a more complete picture of Bangladesh’s competitive performance.
A country’s GCI score depends on 12 core components or ‘pillars’, which can be aggregated into 3 main groups: basic requirements, efficiency enhancers, Innovation, and sophistication. While Bangladesh’s overall GCI score has indeed increased by 1.1%, its score in 6 of the 12 indicators has actually gone down, compared to its score in 5 other indicators which has increased this year.
Bangladesh’s better performance in the Index mainly stems from its improvement in the basic requirements sub-index. In contrast, its score for efficiency enhancers has decreased by a slight margin, while the score for innovation and sophistication has increased slightly.
Bangladesh experienced the most significant improvement in the macroeconomic development area, where the country’s ranking jumped from 72 to 49. This is mainly due to increased confidence in the country’s macroeconomic stability, following a period of relative peace after the political unrest surrounding the war crimes trials in 2013-2014.
The next largest improvements occurred in infrastructure and market size. Transport infrastructure continues to command the largest commitment in Bangladesh’s developmental budget (23.8%)- this has translated to moderate improvements in air transport infrastructure. On the market side, the growing middle class is experiencing a steady growth in disposable income, which has opened up significant market opportunities in the last few years.
Bangladesh’s score in innovation also showed notable improvement. A greater emphasis on IT, supported by substantial government support, as well as increasing internet penetration and cheaper internet access, have contributed to this trend.
Bangladesh experienced the largest downturn in the financial market development indicator. This stems from multiple financial scandals in recent years and also the fact that the prevailing perceptions about the efficiency and compliance of the financial sector have weakened.
Goods market efficiency also decreased by a significant margin. This is due to a greater emphasis on trade tariffs, which now account for 13.5% of total import duty, for revenue generation. Other import-related problems, such as cumbersome customs procedures, have also been cited.
The fact that Bangladesh’s score in technological readiness has slightly deteriorated signifies that, although the country has made notable strides in improving its technological infrastructure, perhaps the improvement isn’t occurring fast enough when viewed from a broader context.
The Center for Policy Dialogue (CPD), which works with the World Economic Forum to prepare the Global Competitiveness Report, surveyed 56 business executives about the most problematic factors for doing business in Bangladesh. The top 5 factors cited by the respondents were corruption, inadequate supply of infrastructure, government instability, inefficient government bureaucracy, and lack of access to financing.
With respect to its five neighbors, Bangladesh is performing very averagely, consistently placing 4th in the major sub-indexes except for efficiency enhancers, where it’s 3rd. While Bangladesh is far behind local leaders such as India and Sri Lanka in Basic Requirements, it needs to catch up considerably in regards to Innovation and Sophistication.
Overall, Bangladesh’s state in the GCI rankings can be adequately summed up through this remark made by Mustafizur Rahman, executive director of CPD: “This is not the kind of jump we expected. We are walking, when we need to run.”
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