I don't know actually how they live in Columbia (no word about shadow incomes of drug traffickers). Yet, I have no grounds not to trust the World Economic Forum, which has been studying the competitiveness of Ukraine and its regions with the Foundation for Effective Governance for the third year.

The latest ranking for 2009-2010 presented to the public in Kiev were quite unexpected for our citizens.
We've always thought that Kharkiv is if not the first city in Ukraine, but definitely not the second. But the ranking alas doesn't give credit for such smugness and arrogance, otherwise the population of the "first capital" would outdo even the citizens of Kyiv. In reality, we can only just make it into Top 5 being the last in this leading group.
Kiev takes obviously the first place like in the past years. This is actually 59th position in the world near Hungary. Dnipropetrovsk Oblast is slightly behind Kiev followed by two pairs of regions: Zakarpattya and Lviv oblasts (ranked 67th and 69th in the Global Report next to Uruguay and Romania); and Crimea and Donetsk regions (ranked 72nd and 73rd between Kazakhstan and Latvia). We've been 76th between Columbia and Egypt so far.

When is Yuzhmash not gonna get us?
It's interesting to understand why, for example, the Crimea, Zakarpattya, Lviv and Dnipropetrovsk with Donetsk are ahead of us? What do they have that we don't?
Let's start from the point that Dnipropetrovsk Oblast produces around 11% of Ukraine’s GDP, which is almost twice as much as Ukraine's average. The oblast ranks 65th in the Global Competitiveness Index, between Russia and Romania. From the perspective of competitiveness, this region outperforms four EU members (Romania, Latvia, Greece and Bulgaria).

The first place of Dnipropetrovsk on contribution to the national GDP has been certainly secured by its mining and metals industry and legendary Yuzhny Heavy Engineering Plant (Yuzhmash). The latter continues to produce quite expensive rocketry. Dnepr carrier rocket built on the basis of the world’s most powerful converted intercontinental ballistic missile PS-20 (SS-18) was launched this April. But if Kharkiv-based Shevchenko Instrument-Making Plant and Malyshev Plant worked at the full capacity, if our aircraft building plant and other enterprises didn't face the turmoil and if local R&D institutes and universities made innovations fully matching their potential, who knows, maybe we would be the second after Kyiv?
However, today Donetsk oblast is also ahead of us by the gross regional product accounting for around 127% in the domestic product.

Donetsk locals achieved a relatively high level of clusterization of the regional economy and more widely apply high-tech processes at their enterprises.

Donetsk oblast has also a big edge in the financial market sophistication (4th place in Ukraine), encouraged by quite a large access to bank loans for business and availability of venture capital.

The leading indicators for the Crimea include the quality of the overall infrastructure, roads, railways, sea and air transport and electronic communications, where the republic takes the first place among other Ukraine’s regions.
Zakarpattya region ranks first in "Labour market efficiency" in the regional and sixth in the global ranking behind only Singapore, Switzerland, USA, Hong Kong and Denmark.

The third top pillar for Zakarpattya is technological readiness (2nd place in Ukraine and 74th in the world). This oblast also performs the best in Ukraine in FDI and technology transfer and availability of latest technologies.
Lviv region outclasses other regions in the financial market sophistication.

You can't also compare this oblast with Kharkiv region by the network of R&D institutes and universities. Innovation potential is the second area where Ukrainian Piemont scores more than other regions. This is mostly down to relatively active cooperation between businesses and universities as well as a high level of salaries in the R&D sector. Lviv scrambled to the high 55th place in this pillar globally and joined Malta, Senegal and Poland.

Government spits on property, business - on responsibility...

Being the third region in Ukraine by population, Kharkiv Oblast takes the fourth place by contribution to the GDP, which is almost 104% of the national indicator. However, in the goods market efficiency we are between Lesotho and Pakistan in the global ranking.

Kharkiv has big competitive advantages in "higher education and training" but we are only the third here. The region gets unexpectedly low score in the education quality, particularly in quality of math and science education (19th and 17th in the regional ranking respectively). Yet, we mustn't grumble as we match the level of Bahrain and Italy by internet access in schools and local availability of specialized research and training services respectively.

The region is also among the leaders in Ukraine in the healthcare development. We show the lowest scores in infant mortality and the highest in the life expectancy.
What impedes us to achieve more? Experts mentioned a relatively poor performance of institutions among the factors affecting competitiveness of Kharkiv oblast: in this pillar we rank the 9th regionally and 96th globally, between Albania and Mali.
The low score is explained by poor protection of intellectual property and property rights by the governmental institutions and by the poor ethical behaviour, protection of minority shareholders’ interests and insufficient strength of auditing and reporting standards in the private sector.
Furthermore, the private institutions in the region are much less competitive than the governmental institutions.

Kharkiv also demonstrates low scores in the quality of overall infrastructure and financial market sophistication (9th position in Ukraine).
The majority of business executives called policy instability, tax regulations and corruption as the most problematic factors for doing business in the region.
Ruin is not a mess in lavatories but it's something that starts in people's heads...

In general, our country performed much worse in 2009-2010 in the ranking developed by the World Economic Forum. Ukraine is placed 82nd out of 133 countries, among the nations it had consistently beaten in the past. Currently, our nearest neighbours in the ranking are Gambia and Algeria.

"By the way, a whole range of developing economies couldn't resist the pressure of the financial crisis", comments Nataliya Izosimova, Managing Director of Foundation for Effective Governance. "Another nine countries dropped by ten or more places in 2009: Botswana, Ghana, Latvia, Mali, Mongolia, Russia, Syria, the Philippines and Croatia. For example, Latvia and Russia dropped 14 and 12 places respectively.

The strongest deterioration of Ukraine’s ranking was registered in the following three components: macroeconomic stability, financial market sophistication and technological readiness.
One of the main reasons for the deterioration in Ukraine’s ranking was the poor sentiment of the top business managers. The Ukrainian business had especially few reasons for optimism. Macroeconomics indicators slumped and the government's anti-crisis steps looked unconvincing.

But the list of the major problems the businesses are facing in Ukraine didn't change much even in the most challenging months. Year after year, business executives mark the inadequacies of government policy as their biggest problem. Therefore, the low assessment of institutions' efficiency does not result only from the influence of the global crisis but shows the fundamental systemic problems in the country.

The ranking developers never give any practical guidelines to the countries (or regions) after a comprehensive evaluation of their economic situations. It doesn't mean though that we shouldn't use the results of the global competitiveness index for, say, correcting mistakes. Croatia put the methodology of the World Economic Forum into the government’s toolbox to formulate policy recommendations. Kazakhstan or Saudi Arabia have utilized the wide public outreach of the report to mobilize public support behind reforms. I wish this research could be applied by the government on the central and local levels.

Profile
In 2010 the World Economic Forum and the Foundation for Effective Governance developed the third research of competitiveness of 20 Ukraine's regions, which account for 90% of the Ukrainian GDP.
The methodology developed for the Global Competitiveness Index (GCI) is applied to assess the competitiveness of Ukraine's economy and its regions. The GCI is based on 12 pillars of competitiveness, providing a comprehensive picture of this complex concept: Institutions, Infrastructure, Macroeconomic Stability, Health and Primary Education, Higher Education and Training, Goods Market Efficiency, Labour Market Efficiency, Financial Market Sophistication, Technological Readiness, Market Size, Business Sophistication and Innovation.
To calculate the GCI the compilers use publicly available statistics data and results of executive opinion survey in a country.