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. Last Updated: 07/27/2016

Report Says Russia More Competitive This Year

Russia has improved in competitiveness over the last year but still trails its West European peers by a long margin, the World Economic Forum showed in a report to be released Thursday.

The Geneva-based foundation's Global Competitiveness Report placed Russia at 58th place out of the 131 countries surveyed in terms of competitiveness, four places up from its 62nd position from 125 nations last year.

The report, based on questionnaires compiled by around 11,000 global business leaders, sought to assess technological development, public institutions and macroeconomic environment among the countries surveyed.

Russia's lackluster performance was attributable to weaknesses in its institutional environment and business standards, the report said. Among emerging economies, Russia was found to be less competitive than China and India, ranked 34 and 48, but better than Brazil, which stands at 72.

One explanatory factor is that Russia has lagged behind in implementing legal and administrative reforms, said Yaroslav Lissovolik, chief economist for Deutsche UFG.

"Russia embarked on reforming state institutions and the private sector five or six years ago, while China and Brazil were already on the next stage of active modernization and reform," Lissovolik said.

Other negative aspects cited by the survey included a perceived deficiency in government efficiency, where Russia ranked 118th, and the lack of an independent judiciary, where it came in 106th, as well as more general concerns about state favoritism in dealings with the private sector.

Weak property rights protection was also reflected in this year's report and was described as "extremely poor and worsening." Private institutions also performed badly, with the country's corporate ethics ranking at 120th.

Russia has been able to regain some of the ground lost in the last two years with modest improvements in areas such as performance-based compensation, availability of specialists and diminished market dominance by a limited number of business groups, the report said.

Yevsei Gurvich, head of the Economic Expert Group, generally agreed with the report's findings but added that recurring issues, such as protection of intellectual property rights and independence of the judiciary, will long continue to sour the country's image.

On a more positive note, Russia has been able to draw on its legacy in terms of production capacity, basic skills and other assets, the report said. But the report warned that unless there was an improvement in underlying competitiveness, dependence on oil and gas revenues would only increase over time.

"The natural resource-based economic boom remains the biggest obstacle to reform in Russia," Gurvich said. "Growth is fueled by the development of the natural resources sector, and the growth of other sectors are dependent on this."

The United States topped this year's list, followed by Switzerland, Denmark, Sweden, Germany, Finland and Singapore. Among other former Soviet republics, Estonia, Latvia and Lithuania all outranked Russia, in 27th, 45th and 38th place, respectively, while Ukraine came in at 73.