In late September, the World Economic Forum published its Global Competitiveness Report in 2006-2007. For the first time within many years, Switzerland became the most competitive world economy, having gone up from the fourth position in 2005. The Mises Center estimates that according to the Global Competitiveness Index compiled by a new method, Belarus, not mentioned in the report, should have be placed 87th among 125 countries. This is the level of Moldova, Venezuela and Serbia. Those below are Tajikistan, Kyrgyzstan, poor countries of Africa and Asia.
Our place at the end of the first hundred of countries at the Global Competitiveness Index is a sort of diagnoses and assessment of the development strategy chosen by the Belarusian authorities. They maintained that the refusal from privatization, liberalization and a heavy restriction of stabilization measures in monetary and fiscal policies while preserving the monopoly of the state in finances, fuel and energy complex and network complexes would yield better results than the comprehensive market reforms.
However, a comparative analysis of statistical data and the returns of the polls of the businesses prove that Belarus is clearly loosing competition. A high-tech export of goods with a high share of added value from Belarus is extremely rare. The share of Belarus' GDP in the world's output was and remains around 0.06 - 0.1percent, depending on a calculation method.
We avoid manufacturing the commodities under the licensed agreements with the world market leaders, while we cannot offer our original high-tech solutions. In the next five to 10 years, we have already lost competition by all main parameters and at most main markets. We can even talk now about whether Belarus can make it as a modern state in the 20-30-years perspective.
The Belarusian policymakers have not realized till now what a global market of the 21st century is. To loose today in the quality of business and legal environments and innovations means to end up in the backyard of progress tomorrow. Our economy being dangerously dependent on the Russian market is the result of strategic mistakes committed ten years ago. If we do not learn a lesson and adjust our economic strategy and policy, Belarus will have the status of a poor commercial province of Russia. Even if we preserve a political independence, all the rest in this country will be controlled by strangers.
The local policymakers should follow the recommendations by a report's co-author, professor of Columbia University, Xavier Sala-i-Martin, who wrote: "At the early stages of development, economies compete by prices. At this stage, it is important to establish the right fundaments. Under fundaments, we understand the institutional environment, which guarantees the rights to property, a physical infrastructure, the minimum necessary level of macroeconomic stability and a good level of basic education and health care. At the second stage of development, countries have to invest extensively in the higher education and training, to raise the efficiency of labor, goods and finances through the application of up-to-date technologies (even if they were invented in the other countries). Finally, at the most advanced stage of development, companies should invest in innovations, creating new products and more advanced business environment and practices."
According to the classification of the World Economic Forum, Belarus is at the second stage of development with per capita income from $3000 to $9000. It means that competition at the level of such factors as higher education and training, market efficiency and technological preparedness should be the most important for us. In the higher education and training category, we are ranked 44th, while by market efficiency (commodities, labor, finance) 89th only. The things are even worse in terms of technological preparedness (92nd).
It is not accidental for experts to call the global competitiveness index an indicator of development prospects. It shows whether we will be able to integrate fast and with minimum losses into the regional and world economy in the mid-term future. Our performance by the dozens of indicators, used to compile the global competitiveness index, proves that we are not.
The adaptation of factors from the basic level will require system reforms. One can forget about the innovative level of development without an active engagement with the world corporate leaders and major transnational companies.

Table 1Global Competitiveness Index (GCI) – 2006

* Estimates by the Mises Center by comparing GCI components