Inbox: New Zealand business lacking in innovation and sophistication

New Zealand continues to tread water in terms of global competitiveness, the World Economic Forum’s 2011 Global Competitiveness Report has found.
While New Zealand’s Global Competitiveness Index score has remained stable since last year, the country has slipped two places to 25th of 142 countries measured, overtaken by Israel and Malaysia.
Switzerland ranked first for the third year in row, followed by Singapore which overtook Sweden to claim second position. The United States declined for third year to fifth place as macroeconomic vulnerabilities continue to build. Australia ranked 20th, drop of four places since last year. China improved by one place to 26th, continuing to lead the way for large developing economies
The Global Competitiveness Index is made up of 111 indicators categorised into 12 pillars of competitiveness in three sub-indices: Basic requirements, Efficiency enhancers, and Innovation and sophistication factors.
New Zealand continues to do well in Basic requirements and Efficiency enhancers, ranking 17th (14th last year) and 18th (same as last year) respectively. Strongest performance is in strength of investor protection (1st), diversion of public funds (1st), number of procedures to start business (1st), quality of primary education (7th), and quality of math and science education (7th). But the good overall rankings for these two sub-indices mask weak performance in some areas. The infrastructure ranking remains low at 34th (37th last year) particularly in quality of electricity supply, mobile telephone subscriptions, rail and road. New Zealand’s hiring and firing practices lag well behind the best in the world (86th).
Performance in Innovation and sophistication factors (ranked 28th, the same as last year) continues to bring New Zealand’s overall ranking down, and remains the greatest challenge and opportunity for New Zealand, says New Zealand Institute director Rick Boven. These are the most important drivers of economic performance in advanced economies, he says. “Government has increased efforts and investment in innovation but we cannot yet see evidence of improvement. Other countries are doing more.”
Areas that continue to constrain overall innovation performance include government procurement of advanced technology products (71st), availability of scientists and engineers (69th), state of cluster development (60th) and value chain breadth of exporting companies (59th). The New Zealand Institute’s research shows that shortages of specialised talent and capital availability are constraining innovation performance too.
“Despite the efforts of many in New Zealand’s innovation ecosystem much more effort and investment will be required to improve competitiveness and lift prosperity. For example, there is still nowhere in New Zealand offering full-time world class professional training in international marketing and sales to lift the success of our many hundreds of internationalising businesses. The countries that are improving competitiveness have well-formulated strategies and much more investment. Complacency must be replaced by urgency or we will continue to fall behind.”
Further information on New Zealand’s competitiveness is available at The full report is available from M

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