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Credit squeeze strangling Spanish business: WEF

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Credit squeeze strangling Spanish business: WEF
World Economic Forum Founder and Executive Chairman Klaus Schwab. Photo: Khalil Mazraawi/AFP
11:51 CEST+02:00
Spain has taken 35th place in the latest World Economic Forum (WEF) global competitiveness rankings, better than the result it achieved 12 months ago, but the forum says the country's credit squeeze is hampering innovation and growth.

Spain has taken 35th position among the 148 countries looked at in the WEF's Global Competitiveness Report 2013–2014, released on Wednesday.

With a Global Competitive Index (GCI) score of 4.57, the crisis-hit southern European country a long way behind first-placed Switzerland, which scored a GCI of 5.67, and fourth-placed Germany, with a score of 5.51.

But Spain is streaks ahead of fellow PIGS countries Italy, which took 49th place globally, Portugal (in 51st place) and Greece, which came in at a lowly 91.

Spain even managed to clamber one place higher than it's 2012 ranking of 36 "despite the current difficult conditions", according to the WEF report.

Looking at Spain's performance, the Swiss-based group economic forum stressed Spain's ability to "leverage its traditional competitive strengths" and highlighted the country's "world-class" transport infrastructure — rated 6th globally.

WEF also gave a plug to Spain's strong information and communications technology base, and a "large and skilled labour force".

Spain ranks eighth globally for tertiary education enrollment rates, the report authors noted.

The WEF also pointed to "sharp public budget cuts" designed to improve Spain's "still-weak" macroeconomic situation, and gave a pat on the back to Spain for measures to improve the banking system and reform the country's labour market.
 
But the forum also warned that the credit squeeze was still causing pain for local firms.
 
"The country  ranks very low in terms of the ease of accessing loans (138th out of 148) or other sources of financing, either through  equity markets (101th) or venture capital (105th)," said the WEF in its report.
 
Research and development scores were also poor: "The reduction of both public and private  budgets for research and innovation could hamper the capacity of local firms to innovate (57th) and contribute to  the economic transformation of the country," the WEF argued.
 
Speaking about Europe more generally, the Global Competitiveness Report 2013–2014 said public debt issues and a battle to stop the break-up of the Euro had taken some of the heat off "deeper competitiveness issues".
 
But the WEF said southern European economies need to maintain the fight by tackling "weaknesses in the functioning and efficiency of their markets".
 
They also need to step up innovation and improve access to credit to narrow the north–south divide in Europe.

Xavier Sala-i-Martin, Professor of Economics, Columbia University, USA, said: “The report highlights a shift in the narrative of the global economy from one year ago, when fire-fighting still characterized much of global and regional economic policy.

"This has now given way to an increasing urgency for leaders to make wide-ranging structural reforms to their economies."

The Global Competitiveness Report’s competitiveness ranking defines competitiveness as the set of institutions, policies and factors that determine the level of productivity of a country.

GCI scores are calculated by drawing together country-level data covering 12 categories – the pillars of competitiveness – that together make up a comprehensive picture of a country’s competitiveness. 

These 12 pillars are: institutions, infrastructure, macroeconomic environment, health and primary education, higher education and training, goods market efficiency, labour market efficiency, financial market development, technological readiness, market size, business sophistication and innovation.

The WEF is and independent, international organization, incorporated in Switzerland as a not-for-profit foundation. It's stated mission is to improve "the state of the World".

Annual WEF events at the invitation only event in Davos, Switzlerand attract world leaders, top business men and many protesters. 

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