Venezuela was the only nation to score worse than Greece in an annual survey of global competitiveness by the IMD business school showed.
Venezuela placed last among the 59 countries because its lack of “an effective legal environment” and lack of “competency in government,” according to IMD, which is based in Lausanne, Switzerland. Greece ranked 58th, scoring lowest in executives’ perceptions of “competency of government” and “research and development” culture.
The survey of 4,200 executives shows how Greece has lost ground in the two years since the European Union and the International Monetary Fund provided the first of two bailouts as the country sank into a sovereign debt crisis. While Venezuela holds the same ranking as last year, the eastern Mediterranean nation has dropped from 46th position in 2010 and 56th slot in 2011.
“It comes down to governance and predictability,” Stephane Garelli, director of the IMD’s World Competitiveness Center, said in an interview. “Businesses can handle almost everything provided the rules are clear and they know what they can and can’t do.”
The challenges facing Greece include the need to “establish institutional reforms to shrink the size of the public sector” and to “eliminate corruption” and re-establish confidence in the political system, IMD said in the report.
Euro exit discussed
Concern about Greece’s prospects has increased since last month’s elections when turned against parties following the terms of its bailout, prompting European policy makers to openly discuss the possibility of ejecting the nation from the 17- member euro club. That threat has generated concern about a run on Greek banks. A second ballot is scheduled for June 17.
By contrast, Ireland and Portugal, the other two euro countries that have received financial assistance since the debt crisis began, ranked 20th and 41st in the survey, with Ireland advancing by four places from last year and Portugal falling by one. Spain was in 35th position.
No euro-area nation placed in the top five, with Germany coming closest at No. 9. Hong Kong, the U.S. and Switzerland led the beauty contest, followed by Singapore, Sweden, Canada and Taiwan.
“U.S. competitiveness has a deep impact on the rest of the world because it is uniquely interacting with every other economy, advanced or emerging,” Garelli said. “No other nation can exercise such a strong pull effect on the world. Europe is burdened with austerity and fragmented political leadership, while a south-south bloc of emerging markets is still a work in progress,” he said.
The U.K. ranked 18th, while France took the 29th position in the survey and Italy came in at No. 40. Japan was 27th, four places behind China.