New dip in global competitiveness

Greece slipped four places to 71st on a global competitiveness index ranking 133 nations after Greek government regulations and inflexible labor market laws were considered to be among the worst in the world. The index, compiled by the World Economic Forum (WEF), described Greece’s inefficient government bureaucracy, restrictive labor regulations and corruption as being the «most problematic factors» for the country. Greece was given the lowest score among all its eurozone peers, placing the country some 20 positions below the second last eurozone member, Malta. Latvia, Kazakhstan, Botswana and Uruguay were all judged to be more competitive than Greece. On a global level, the United States lost its top spot in the index to Switzerland, which fell to number two, due to a weakening of its financial markets and a deterioration of its macroeconomic stability. The rankings are based on 12 pillars of competitiveness, including, among others, an assessment of infrastructure, macroeconomic stability, health and primary education, financial market sophistication and innovation. WEF rated low level of public trust in Greek politicians and wastefulness of government spending as «competitive disadvantages.» It ranked Greece 125th with respect to the burden of government regulation and 128th in the case of wage flexibility. On the plus side, Greece scored well in the area of regulations governing securities exchanges, soundness of banks and protection of minority shareholders interests. Greek government officials have repeatedly voiced their intention to boost the country’s competitiveness with reforms that are often watered down before getting to Parliament or are not properly implemented. The Development Ministry recently announced it will prepare a draft law to reduce the number of steps required to set up a business from 18 to just four. Ministry sources said yesterday the measure has been «frozen» due to the October 4 national elections and the dissolution of Parliament. FDI down in first half after 2008 slide Foreign direct investment (FDI) in Greece is expected to have fallen by between 15 to 20 percent in the first half of 2009 from previous year’s levels, after recording a sharp drop in 2008, according to a state organization appointed the task of attracting foreign investors to the country. Apostolos Tsoukalas, CEO of Invest in Greece, said in Thessaloniki that FDI in Greece fell by 22 percent in 2008 to 3.5 billion euros from 4.5 billion in 2007, underperforming global trends seen in the same period. Figures form the United Nations Conference on Trade and Development (UNCTAD) show that FDI fell 15 percent year-on-year across the globe in 2008, with developing countries showing the biggest losses. An upturn in global FDI is not expected until 2011, according to experts. Tsoukalas was optimistic about the second half of 2009 for Greece, saying that extensive talks had been held with companies from countries such as Australia, Canada and China about investment in Greece. Greece is one of the laggards in the European Union at drawing FDI, with foreign investors citing bureaucracy, corruption and rigid labor laws as reasons for sidestepping the country.