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The Worst Economies in the World

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After sliding in the rankings for four consecutive years, the United States moved up two places in the World Economic Forum’s competitiveness ranking, from seventh last year to fifth in 2013. A combination of factors, including improving financial markets and a strong university system, helped the U.S. improve, despite certain weak macroeconomic elements.

The WEF's Global Competitiveness Report defines competitiveness as the “institutions, policies, and factors that determine the level of productivity of a country.” In order to assess competitiveness, the WEF divided the 148 nations it surveyed into one of three classifications, depending on their development. Based on the WEF’s report, these are the worst economies in the world.

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“Factor-driven” economies are least developed and rely on low-skilled labor and natural resources. More developed countries are considered “efficiency-driven” economies because they focus on improving economic output through increasing production efficiency. The most developed economies, which rely on innovation and technological changes to drive growth, are considered “innovation-driven” economies. Nations may also fall in between these classifications.

While gross domestic product (GDP) is not a measure of well-being or competitiveness in itself, less competitive nations often have low GDP per capita, and the least competitive nations also have among the lowest GDP per capita. This is because the same factors that prevent countries from competing for new business are often also the same factors that limit productivity and output.

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Almost all the 10 least competitive economies are extremely poor -- six of them have a GDP per capita below $1,000. One of these economies, Burundi, has a per capita GDP of just $282. U.S. GDP per capita, by comparison, is nearly $50,000.

According to Margareta Drzeniek-Hanouz, lead economist at the WEF's Global Competitiveness and Benchmarking Network, “competitiveness is not so much about countries competing in the global marketplace, but rather about the factors -- politicians, institutions --that countries put into place to raise productivity and thereby grow.” In the case of the United States, Drzeniek-Hanouz highlighted financial market efficiency, labor market efficiency and innovation as factors that make the country globally competitive.

Just as the 10 least competitive nations are relatively poor, the 10 most competitive nations are relatively wealthy. And as wealthy countries they have the ability to borrow a great deal to support their spending and investments, which can result in high government debt. The least competitive countries lack this ability. While the gross national debt of seven of the 10 most competitive nations was at least 50% of GDP as of 2012, just one of the least competitive nations -- Mauritania -- had debt totalling more than 50% of GDP. And given that most of these countries have extremely low per capita GDP, the amount they can borrow is extremely small.

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To create the Global Competitiveness Index (GCI) score for each country, the WEF ranked more than 100 economic indicators that it grouped into 12 broad categories. Also referred to as pillars, these categories quantify the extent to which a country is competitive. The pillars were then scored from 1 to 7, but each had a different weighting in the final country rank, depending on which classification a nation fell under. Innovation and sophistication accounted for 30% of the score for nations such as the United States, which is an innovation-driven economy, but just 5% of the final score for less-developed nations such as Haiti, a factor-driven economy.

Based on the WEF’s Global Competitiveness Report, which ranked 148 countries, 24/7 Wall St. reviewed the economies with the highest and lowest GCI scores. All GDP figures, as well as figures on government debt as a percentage of GDP and GDP per capita, are stated as purchasing power parity for 2012 and were provided to the WEF by the International Monetary Fund. These are the 10 most and least competitive global economies.

These are the worst economies in the world.

10. Myanmar
> GCI score: 3.23
> GDP per capita: $835 (20th lowest)
> Debt as a pct. of GDP: 47.5% (63rd highest)
> Pct. of residents using Internet: 1.1% (2nd lowest)
> Biggest problem in doing business: Access to financing and police instability

Myanmar ranks as the 10th least competitive nation in the world despite the progress it has achieved since 2011, when the decades-long military rule ended. Since then, the once-isolated country has opened up to the outside world. Myanmar's economy still remains behind much of the world, lacking many of the basic requirements for economic competitiveness. The nation has an inefficient legal framework, a lack of transparency in government policy making and an extremely low quality of infrastructure -- all major issues limiting its competitiveness. The availability of modern technology is also highly limited, with barely 1% of the population using the Internet.

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9. Burkina Faso
> GCI score: 3.21
> GDP per capita: $603 (10th lowest)
> Debt as a pct. of GDP: 27.7% (35th lowest)
> Pct. of residents using Internet: 3.7% (11th lowest)
> Biggest problem in doing business: Access to financing

Burkina Faso, located in Western Africa, has one of the worst health care and basic education systems in the world. Malaria, a disease mostly eradicated in developed countries, is a major problem in Burkina Faso, with nearly a third of the residents suffering from the disease. Similarly, the country has one of the highest rates of infant mortality in the world at 81.6 deaths per 1,000 live births. The nation’s enrollment rate of students in primary school is also among the lowest in the world. Also indicative of the nation’s weak economy are its poor infrastructure and low scores for higher education and training.

8. Mauritania
> GCI score: 3.19
> GDP per capita: $1,157 (26th lowest)
> Debt as a pct. of GDP: 79.7% (21st highest)
> Pct. of residents using Internet: 5.4% (18th lowest)
> Biggest problem in doing business: Access to financing

Mauritania was rated as one of the worst nations for higher education and training, which are necessary to develop a skilled and competitive workforce. In addition to a poor educational system, the nation also has some of the lowest secondary and tertiary enrollment rates in the world. The nation received poor ratings for its inability to attract talent or to properly match-up pay to productivity, among other factors. However, Mauritania's worst problem may be the still prevalent system of slavery, which was only legally abolished in 1981 and officially criminalized in 2007. As recently as 2012, between 10% to 20% of the population, or as many as 680,000 people, were still enslaved, according to a CNN report on Mauritania.

7. Angola
> GCI score: 3.15
> GDP per capita: $5,873 (71st lowest)
> Debt as a pct. of GDP: 29.3% (39th lowest)
> Pct. of residents using Internet: 16.9% (39th lowest)
> Biggest problem in doing business: Corruption

Angola spent more than a quarter century dealing with a bitter civil war that resulted in as many a 1.5 million deaths. Since the end of the civil war in 2002, the nation has become a major producer of oil and has been a member of OPEC since 2006. However, the country still lacks some of the key elements needed to promote competitiveness, including strong auditing mandates and corporate checks-and-balances. The nation also was ranked as having the lowest quality of infrastructure of any nation, with one of the lowest quality of electricity supply and relatively few mobile telephone subscribers, at 48.6 per 100 residents.

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6. Haiti
> GCI score: 3.11
> GDP per capita: $759 (17th lowest)
> Debt as a pct. of GDP: 15.4% (17th lowest)
> Pct. of residents using Internet: 10.9% (25th lowest)
> Biggest problem in doing business: Access to financing

In 2010, Haiti was rocked by an earthquake that is estimated to have killed more than 300,000 people. The nation was hardly well-off before the earthquake -- it was already exceptionally poor and among the least developed nations in the world. Today, access to even basic requirements of a functional economy are limited. Haiti’s ports and roads are among the worst-rated in the world, while its electricity supply and telephone lines are also limited. Additionally, only one nation, Venezuela, rated worse for protecting property rights. Haiti also received poor scores for its limited judicial independence and for the limited trust in politicians, who are believed to be more likely to ask for bribes or misuse public funds than their counterparts in most other countries.

5. Sierra Leone
> GCI score: 3.01
> GDP per capita: $613 (11th lowest)
> Debt as a pct. of GDP: 44.5% (68th highest)
> Pct. of residents using Internet: 1.3% (4th lowest)
> Biggest problem in doing business: Access to financing

Sierra Leone was one of only three other countries studied by the WEF to have a negative gross national savings score in 2012. It also had some of the worst inflation rates in the world, with consumer prices rising by 13.8% in 2012, higher than all but eight other countries. In terms of health care, Sierra Leone consistently ranks close to the bottom. Malaria is relatively common, and there are more than 700 cases of tuberculosis per 100,000 people, a rate surpassed by only South Africa and Swaziland. Sierra Leone has the worst infant mortality rate, and the life expectancy at birth is just 47.8 years, the worst out of the 148 countries studied.

4. Yemen
> GCI score: 2.98
> GDP per capita: $1,377 (31st lowest)
> Debt as a pct. of GDP: 46.7% (55th highest)
> Pct. of residents using Internet: 17.4% (42nd lowest)
> Biggest problem in doing business: Police instability

When Yemen residents were asked to identify the most problematic factor for doing business, most respondents said police instability. Inadequate supplies of infrastructure and corruption followed closely as obstacles for conducting business. Yemen’s business transactions are plagued by bribes and under-the-table dealing, while the legal system cannot be relied on for help. Yemen’s government also is considered to be excessively wasteful, and public funds are frequently misused. Violence in the region and the presence of extremist groups have made it difficult for residents to innovate or accomplish very much at all in the way of business. The business costs of crime, violence and terrorism were judged to be higher in Yemen than most other nations.

3. Burundi
> GCI score: 2.92
> GDP per capita: $282 (2nd lowest)
> Debt as a pct. of GDP: 32.0% (40th lowest)
> Pct. of residents using Internet: 1.2% (3rd lowest)
> Biggest problem in doing business: Access to financing

Burundi did less to promote economic efficiency than any other nation in the world, according to the WEF. Access to financing and corruption were by far the most selected problematic factors for doing business; the availability of financial services in Burundi was ranked among the worst in the world. Burundi is the world’s second-poorest nation in terms of GDP per capita, behind only Malawi. Residents of Burundi said their judiciaries were heavily influenced by members of government, more than those in almost any other country. The poor reliability of Burundi’s police services -- second worst out of 148 countries -- and low scores for ethical behavior in Burundian businesses make doing business in the country extremely difficult.

2. Guinea
> GCI score: 2.91
> GDP per capita: $519 (7th lowest)
> Debt as a pct. of GDP: 43.0% (74th highest)
> Pct. of residents using Internet: 1.5% (6th lowest)
> Biggest problem in doing business: Corruption

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The quality of infrastructure in Guinea is exceptionally bad. The country has one of the least reliable electrical supplies in the world, one of the lowest numbers of fixed telephone lines per 100 residents and some of the worst roads in the world. Its health care is not much better. In 2010, there were nearly 38,000 incidents of malaria for every 100,000 people in the country, the most severe locus of malaria cases in the world. Poor health and primary education mean workers are sick more often and less likely to adapt to new work environments.

1. Chad
> GCI score: 2.85
> GDP per capita: $1,006 (23rd lowest)
> Debt as a pct. of GDP: 34.5% (53rd lowest)
> Pct. of residents using Internet: 2.1% (8th lowest)
> Biggest problem in doing business: Access to financing

Chad has the worst infrastructure in the world, according to the WEF. Electricity, fixed and mobile phone lines, and transportation options are all extremely limited in the sub-Saharan nation. Diversion of public funds also is considered a major problem in the country, as is the weak protection of citizens’ property rights. Chad also ranked as the worst nation for illicit payments and bribes. No country received a worse grade than Chad in health and primary education. The nation had more than 36,000 cases of malaria per 100,000 residents in 2010, and a life expectancy at birth of less than 50 years in 2011.

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