South Africa is ranked 52nd this year, remaining the highest-ranked country in sub-Saharan Africa and the third-placed among the BRICS economies. The country benefits from the large size of its economy, particularly by regional standards (it ranks 25th in the market size pillar). It also does well on measures of the quality of its institutions and on factor allocation, such as intellectual property protection (20th), property rights (26th), the accountability of its private institutions (2nd), and its goods market efficiency (32rd). (Click and zoom the image for a clear view)
Particularly impressive is the country’s financial market development (3rd), indicating high confidence in South Africa’s financial markets at a time when trust is returning only slowly in many other parts of the world. South Africa also does reasonably well in more complex areas such as business sophistication (38th) and innovation (42nd), benefitting from good scientific research institutions (34th) and strong collaboration between universities and the business sector in innovation (30th). These combined attributes make South Africa the most competitive economy in the region. However, in order to further enhance its competitiveness, the country will need to address some weaknesses. South Africa ranks 113th in labor market efficiency (a drop of 18 places from last year), with rigid hiring and firing practices (143rd), a lack of flexibility in wage determination by companies (140th), and significant tensions in labor-employer relations (144th). (Click & zoom the image for a clear view)
Efforts must also be made to increase the university enrollment rate in order to better develop its innovation potential. Combined efforts in these areas will be critical in view of the country’s high unemployment rate of almost 25 percent in the second quarter of 2012. In addition, South Africa’s infrastructure, although good by regional standards, requires upgrading (63rd). The poor security situation remains another important obstacle to doing business in South Africa. The high business costs of crime and violence (134th) and the sense that the police are unable to provide sufficient protection from crime (90th) do not contribute to an environment that fosters competitiveness. Another major concern remains the health of the workforce, which is ranked 132nd out of 144 economies—the result of high rates of communicable diseases and poor health indicators more generally.
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