RIGA - The World Economic Forum's competitiveness report for 2004, released on Oct. 13, put much of Northern Europe at the forefront of the business world, with Finland retaining first place, followed by its Nordic neighbors, and Estonia ranking a surprising 20th - an improvement of two places over last year's ranking. Sweden was in third place and Denmark and Norway in fifth and sixth respectively.
The United States once again took second place and Taiwan fourth.
Lithuania and Latvia were way down the list, ranking 36th and 44th respectively out of the 104 countries listed in the report.
Tellingly, while Estonia was bumped up two places and Lithuania four from year to year, Latvia's position worsened - falling seven places on the list. An inefficient bureaucracy and corruption were the two main things pulling Latvia down, survey analysts said in their report. Corruption affected both Lithuania and Estonia, but to a much lesser extent than Latvia, where pessimistic attitudes prevail.
Estonia's greatest weakness proved to be an inadequately educated work force, followed by a disorganized bureaucracy. By contrast, macroeconomic stability (the country consistently runs a budget surplus) and a technology transfer contributed most to the country's high ranking.
While Latvia and Lithuania have routinely scored high on various corruption indexes, the countries usually rely on public perception for such measurements.
"From such reports we can conclude that Estonia is an attractive economy, yet we have quite a few legal acts that should be amended to make the country even more competitive," Andrus Ansip, minister of economic affairs and communications, told The Baltic Times.
"We also need to improve the availability of highly qualified specialists, as the cheap and low-qualified labor force in Estonia is already accessible," he added.
Opinions on the actual implications of such surveys, including the World Bank's soon to be released "Doing Business in 2005: Removing Obstacles to Growth," are usually divided.
"The Latvian economy has been growing faster than the Estonian one since 1995," said Alf Vanags, head of the Baltic International Centre for Economic Policy Studies. He added that, despite these figures and Estonia's relatively high position in the report, all three Baltic countries - joined by Poland - make up the EU-25's four poorest in terms of GDP per capita.
While setting European rankings, the report does not specify exactly how far apart countries are from each other, Vanags said.
Still, some cite the survey's ability to mobilize public opinion in order to deal with an economy's structural weaknesses.
"What we have noticed is that the conclusions from such reports usually trigger positive reforms for two reasons. First, national governments that see their rating compared to other countries say, 'We can't be doing worse than our neighbors!' and intensify the necessary reforms. Second, when the local media picks up news about the ratings, economic details that may be improved receive closer attention, which leads to a general improvement of the situation," Simeon Djankov, manager of the World Bank's monitoring, analysis and policy unit, said.
Bureaucratic problems plaguing all three Baltic states dominated first and second place in the World Economic Forum´s Global Competitiveness Report.
"Many post-Soviet economies have been growing like Estonia at the average annual rate of 5.5 percent in the recent years. What currently needs attention and reform in Estonia is the notary system. Notaries today are required for too many business transactions, and that slows down business activities," Djankov added. o
Aleksei Gunter in Tallinn
contributed to this report.
