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The presentation of the sixth edition of the Ukrainian National Competitiveness Report 2013

In 2013, the top five of the national competitiveness rating has significantly changed. Odessa oblast, having outrun Donetsk and Dnepropetrovsk oblasts, ranked third. Moreover, Kiev oblast has lost its leadership position and no longer ranks among the top five of the rating. This statement was made by Igor Goncharenko, Senior Project Manager of the Foundation for Effective Governance and co-author of the competitiveness report, during the presentation of the sixth edition of the Ukrainian National Competitiveness Report 2013 prepared by the Foundation for Effective Governance with support from the World Economic Forum (WEF).

“This year, according to the Ukrainian National Competitiveness Report, all regions without exception have improved their indicators. Over the last three years several regions managed to significantly improve their rating. These regions include the Autonomous Republic of Crimea, which improved its rating position by 11 points, Khmelnitsky oblast – advanced by 7 points, as well as Odessa and Rovno oblasts – advanced by 5 points each. On the other hand, the rating of several regions of Ukraine has downgraded: Lugansk and Nikolaev oblasts went down by 8 points, and Volyn oblast – by 5 points in the national competitiveness rating,” stressed the expert.

As a result, the new top five of the national competitiveness rating looks as follows: the city of Kiev, Kharkov, Odessa, Donetsk, and Dnepropetrovsk oblasts. As previously, these are the large technologically advanced regions, which have a well developed infrastructure and system of higher education, as well as well developed business and innovation related infrastructure. Five regions at the bottom of the rating remained generally unchanged: Chernigov, Ternopol, Zhitomir, Kherson, and Kirovograd oblasts. The only exception was Kherson oblast, which this year finally moved up from the last place in the national competitiveness rating.

Compared to the world countries, the city of Kiev - as the leader of the national competitiveness rating - ranks 51st among 148 countries and matches the level of such countries as Latvia, Kazakhstan, and Italy. Kirovohrad, which is at the bottom of the national competitiveness rating, corresponds to 99th place globally, matching such countries as Nicaragua and Salvador.

As for individual constituent elements of competitiveness index, the level of institutional development in the regions of Ukraine traditionally remains a constraining factor for competitiveness growth. This is especially true for the national rating leaders. For example, for the third year in a row Kiev ranks at the bottom in terms of institutional development in the national competitiveness rating and ranks 104th in the global rating among 148 countries (which corresponds to the level of Cote d’Ivoire). This year Khmelnitsky oblast was the best in terms of institutional development ranking 68th in the global rating, which matches the level of Georgia. Concentration of large and highly effective business had a positive impact on the results of Donetsk oblast: in terms of effectiveness of corporate governance the region’s position is higher than that in Switzerland, Canada, and USA and ranks 11th among 148 world countries in the global rating.

With regard to such constituent element as infrastructure, all Ukrainian regions have high ranking on the quality of railway infrastructure, and poor ranking on the quality of motor roads, ports infrastructure, and air traffic. For example, in terms of quality of railway infrastructure Kharkov oblast ranks 11th in the global rating, matching the level of Netherlands.  As for the city of Kiev, infrastructure remains its competitive advantage both among the Ukrainian regions and globally. Based on 2013 results, the city of Kiev ranks significantly higher than the average for Ukraine, as well as ranks 32nd among 148 world countries in the global rating. Ternopol oblast has the worst ranking on this constituent element, which corresponds to 101st position in the global rating (the level of Romania and Albania).

With regard to the level of business development, the average ranking of Ukrainian regions is lower than global average. At the same time, it is higher than the average in CIS and Central and Eastern Europe countries. The improvement of Ukrainian regions’ ranking on this constituent element is hampered by limited added value chain and low level of production processes development. For the second year in a row Donetsk oblast ranks as undisputed leader on business development in Ukraine, demonstrating high results in the global context. It ranks 53rd in the global rating, matching the results of Estonia, Chile, and Mexico.

The fact that Ukrainian business is unable to successfully compete in the global market is also evidenced by the results of a special research undertaken by the Foundation for Effective Governance within the framework of preparation of Ukrainian National Competitiveness Report 2013. Although Ukrainian business is characterized by relatively high dynamics of changes and potential for development in certain areas, it often lacks knowledge, technologies, and financial resources, and sometimes just lacks the “culture of doing business”.

“On a number of indicators Ukrainian business is inferior not only to the world business leaders, but also to comparable CIS and Eastern Europe countries,” stressed Nataliya Izosimova, Director of the Foundation for Effective Governance.

She also added that Ukraine’s competitiveness growth depends not only on the actions of Ukrainian government, but also and greatly on Ukrainian business itself.

“Ukraine’s future success in global competition will greatly depend on the ability of Ukrainian business to realize its potential and catch up with world business leaders,” said Nataliya Izosimova.

As previously, national competitiveness index was based on WEF methodology for assigning global competitiveness index.

“Data received as a result of such research are not just an important instrument for comparative analysis of actual results and previous years’ trends. They may also serve as a basis for discussions aimed at formulating future economic policy. The World Economic Forum uses its Global Competitiveness Report as one of information sources for the development of long-term scenarios of economic development of Ukraine. The results of this work will be presented at the annual Davos Forum in January 2014,” said Stephan Mergenthaler, WEF Associate Director.

Date: 28.11.2013