Recommendations in eight areas to strengthen the competitiveness of the Cypriot economy include the 2nd Competitiveness Report (2021) of the Economic and Competitiveness Council which also includes a separate section on the economic and social impact of the COVID-19 pandemic, while emphasizing that “in many cases no new policies are required from the Government but a greater emphasis on the effective implementation and coordination of existing policies “.
The 2nd Report of the Economic and Competitiveness Council, presented today, records the competitiveness performance of the Cypriot economy, both overall and in selected aspects on the basis of internationally recognized indicators and methodologies, which are used in widespread benchmarking frameworks, such as global Competitiveness Report of the International Economic Forum and the Business Report of the World Bank. More than 150 specialized indicators that reflect individual aspects of the competitiveness of the Cypriot economy are also examined and compared with the respective performances of 12 other selected economies and the EU average. The performance of the competitiveness of the economy is also reviewed over time.
It also includes an assessment of the competitiveness of Cyprus in the context of a broad definition of the term competitiveness, which includes all institutions, policies and other factors, including social and environmental, that support and maintain business value creation and support the improvement of livelihoods. level of citizens on a sustainable basis. It records the comparative advantages but also the weaknesses and challenges faced by the economy, and provides policy recommendations to address the challenges and strengthen the competitiveness of the economy.
In addition, the Report emphasizes the importance of formulating the Long-Term Strategy for the Sustainable Development of the Cypriot economy, which includes reform and investment measures that promote the transition to a green and digital economy, the diversification of the economy and the strengthening of its resilience, while a large number of them have been included for funding from the Recovery and Sustainability Plan.
Presenting at a press conference the Report, prepared by the University of Cyprus and which updates and expands the analysis and findings of the 1st Exhibition (2019), the President of the Economy and Competitiveness Council Takis Clerides stressed that the objectives of the 2nd report are “complete overview of the competitiveness of the Cypriot economy and the parameters that affect it “.
“It is considered a useful analytical tool for assessing the competitiveness of Cyprus in comparison with other countries and with the EU average and over time,” he said, noting that the goal is to identify, evaluate and systematically monitor the factors that affect competitiveness. identifying comparative advantages and key challenges and providing appropriate policy recommendations to address competitiveness issues.
The report “is a useful tool not only for policy makers but also for the purposes of a broader dialogue on competitiveness and development,” he said.
The Vice President of the Council Andreas Assiotis stressed that the report not only examines an index for a specific year but also examines how an index changes during the last year, adding that through this tool “one can see how it changes or how it has changed the Cypriot economy for the last at least 10 years “.
Mr. Assiotis, explaining that there are two conditions that are productivity and competitiveness, said that everyone can become productive, but “how much more competitive this can be compared to the efforts made by other countries towards the goal. this”.
He also said that Cyprus in some indicators is at quite high levels, in others much more effort is needed “, while he referred to the need to maintain Cyprus” and in the indicators that are at high levels “.
He added that in compiling the report, Cyprus is compared to many countries such as Denmark, Estonia, Finland, Germany, Greece, Ireland, Malta, the Netherlands, Portugal, Slovenia, the United Kingdom, Israel, the EU and the Eurozone.
Regarding the impact of the economy from the pandemic, Mr. Assiotis said that economic activity had shrunk by 5% in 2020 and stressed that the economy “will cover the lost ground in 2021 as a growth rate of 5.5% is expected, while noting that this is due to the state intervention that was immediate and helped to contain the effects of the crisis “.
“This was done at the cost of a higher public debt,” he said, adding that “if this support was not provided and the (state) costs increased next year, we would have a problem because the state would not have revenue.”
He stated that the vision of the Long-Term Strategy is to make Cyprus one of the best countries in the world for someone to live, work and be active.
Professor of the University of Cyprus Sofronis Clerides, who prepared the exhibition with his staff at the University, said that the exhibition becomes an anatomy of the Cypriot economy and presents a broad concept of competitiveness, adding that competitiveness is linked to productivity and “looks and environmental and social institutions and sustainability “.
Another important thing, according to Mr. Clerides, the report “avoids focusing on one or two numbers or scores” and “gives all the wealth of information”.
“We should not focus on just one indicator, never, because all these indicators are very imperfect indicators,” he said, noting that the report added the areas of attracting foreign direct investment and diversifying the economy that did not exist in the first report.
He also stated that “the general finding is that Cyprus is performing quite well” in relation to the course of the international economy but “there is certainly room for improvement in various areas”.
In particular, the report identifies eight areas in which the competitiveness of the Cypriot economy could be further strengthened.
According to the Report, these are the promotion of entrepreneurship and the strengthening of the dynamic development of Cypriot companies, the strengthening of interconnections and interaction between companies, supporting their integration into networks of international business suppliers as well as cooperation between business, research and academia. enhancing the adoption of digital technologies, improving access to finance by continuing successful efforts to strengthen the banking system, but also by developing and allocating alternative sources of funding and making better use of human resources through education and training , by increasing graduates with qualifications in technical and natural sciences, as well as by enhancing digital and entrepreneurial skills, so that they meet both current and future requirements.
Also, the strengthening of external connectivity through the formulation of a strategy for international transport and connectivity, as well as the facilitation of interconnection with key international business partners, the attraction of foreign direct investment through the formation of an attractive economic environment and the diversification of through the development of new sectors that will complement existing economic activities, and the strengthening of the resilience of key existing sectors.
In relation to the diversification of the economic model, the report emphasizes the need for Cyprus to develop new sectors of the economy, which will be complementary to the existing economic activities (health, higher education, specialized, light industry and agricultural technology), but also the need for Cyprus to increase the diversification and resilience of the existing key sectors of the economy through the expansion and qualitative diversification of external markets.
In terms of entrepreneurship, the report suggests developing a business culture, providing a social safety net to reduce the cost of failure, reducing the cost of setting up a business, identifying and promoting successful cases, and increasing core research funding.
In relation to business synergies, the report suggests a review of the institutional framework for university spin-offs, while in relation to the adoption of digital technologies, the report suggests intensifying efforts to digitize public services.
In relation to human capital, the report suggests enhancing the digital skills of teachers.
With regard to foreign direct investment, the Council report suggests a focus on attracting investment with a view to increasing productivity and creating high-quality jobs, targeting entrepreneurial talent rather than affluent individuals, and strengthening the image of Cyprus as an attractive destination of business activity, strengthening the regulatory control of institutions and activities that affect the image of Cyprus, improving the provision of services and infrastructure aimed at enhancing the quality of life (schools, health services, environment) and reducing bureaucracy and improving the judicial system.