BEIRUT: Lebanon’s economy has the potential to become more competitive and reap the benefits in terms of higher growth if key challenges are addressed, said a report from the Organization for Economic Cooperation and Development and the World Economic Forum.

The OECD and WEF’s Arab World Competitiveness Report said Lebanon has one of the better educational systems in the region, with both the quality of education and enrollment rates ranked as “good.”

The WEF’s Global Competitiveness Index ranks Lebanon in 12th place globally on the overall quality of its educational system and in sixth place worldwide in terms of its math and science.

The two organizations also highlighted the high quality of management schools in the country, as reflected by its ranking in 18th place worldwide in this category.

The report added, however, that educational outcomes could be improved further if Lebanese businesses provide more opportunities for on-the-job training.

The OECD and WEF report noted the presence of intense domestic competition in local markets as another key advantage, adding that intense competition supports high efficiency in the domestic market.

According to the Global Competitiveness Index, Lebanon has the 28th most competitive market worldwide and the 35th most efficient market.

The report also noted the low number of administrative barriers to entering the market, with Lebanon’s ranking 23rd in the number of procedures to start a business.

It also cited as a competitive advantage the country’s taxation system, which limits distortions (21st place), as another factor contributing to a healthy, competitive environment.

The report encouraged the streamlining of customs procedures in order to facilitate the flow of goods over the border and, eventually, to support efforts to attract FDI to Lebanon.

In parallel, the OECD and WEF said that the key challenges for Lebanon remain its weak institutional set-up, under-developed infrastructure, and difficult macroeconomic environment.

The report noted that institutions suffer from corruption as reflected by the country’s 132nd position among 142 countries worldwide, inefficient government agencies (117th place), as well as a judiciary that does not meet the needs of businesses (105th place) and that is subject to external influence (127th place).

The two organizations also listed the security situation in the country as a weakness that imposes significant costs on the business community, with Lebanon ranking in 105th place in this category, “mainly due to the prevalenceof terrorism.”

The OECD and WEF added that upgrading the country’s infrastructure will require stabilizing electricity supply (141st), as well as investing in roads (115th) and railroads (122nd).

Such investments will require the participation of the private sector because of the need for fiscal consolidation due to repeatedly high deficits and an unsustainable level of government debt, the report said.

The report concluded that Lebanon’s competitive advantages provide a strong base if these challenges are addressed.