Though Nepal has improved its competitiveness by a notch, it has lost its rank as the third most competitive economy in South Asia, according to Global Competitiveness Report 2016-17 published by World Economic Forum (WEF).
Nepal scored 3.87 points and ranked 98th among 138 economies in the world, reveals the Global Competitiveness Index (GCI).
The country was at the 100th position among 140 countries last year.
In South Asia, India leads the table with global ranking of 39, followed by Sri Lanka (71) and Bhutan (97), whereas Nepal slipped to fourth most competitive economy. The GCI has ranked Bangladesh and Pakistan at 106th and 122nd position, respectively.
Nepal is still under the factor-driven economies, Stage 1, which has 35 countries.
However, the country boasts the best macroeconomic environment in South Asia, and after significant recent improvement, the second highest level of health and primary education, according to the report.
However, Nepal is the worst performer in terms of infrastructure. “The quality of infrastructure in Nepal has stalled in Nepal,” the report added.
There are three sub-indices in the competitiveness report — basic requirements, efficiency enhancers, and Innovation and sophistication factors. Nepal is ranked 98th in basic requirements and efficiency enhancers sub-indices, while it is at the 127th position in Innovation and Sophistication sub-index.
Likewise, there are 12 pillars under the three sub-indices. Under Basic Requirements sub-index, Nepal ranks 100th with a score of 3.50 in Institutions, 130th in Infrastructure (with a score of 2.16), 27th in macroeconomic environment with a score of 5.54, and 82nd in Health and Primary Education pillar scoring 5.56.
Similarly under Efficiency Enhancer sub-index, Nepal ranks 113th (with a score of 3.26) in Higher Education and Trainings, 116th (with 3.90 score) in Goods Market Efficiency, 103rd (3.86 score) in Labor Market Efficiency, 73rd (with 3.91 score) in Financial Market Development, 126th (with 2.56 score) in Technological Readiness, and 91st (with 3.24 score) in Market Size pillars, according to the report.
“Nepal ranks 124th (with 3.25 score) in Business Sophistication and 126th (with 2.63 score) in Innovation pillar under the Innovation and Sophistication sub-index,” it added.
In Global Competitiveness Report 2015-2016, Nepal was ranked 100th, with a score of 3.9, among 140 economies in the world. Likewise, with a score of 3.8, Nepal was ranked 102nd in the Global Competitiveness Report 2014-2015, among 144 economies.
The report also highlighted government instability, inadequate supply of infrastructure, corruption, inefficient government bureaucracy and policy instability as the most problematic factors in doing business in Nepal.
According to the report, Switzerland is the most competitive economy, followed by Singapore and United States.