New Zealand has improved three places to 15th out of 57 on the world economic competitiveness scoreboard, according to the just-released IMD World Competitiveness Yearbook.
The improved ranking has helped close the trans-Tasman gap with Australia remaining static on its 2008 seventh place ranking. The US is again number one.
This year the Yearbook introduced an additional ranking – Stress Test on Competitiveness. Denmark topped the stress test ranking and New Zealand came in creditable 12th.
According to professor Stephane Garelli, director of the IMD’s World Competitiveness Centre, the new ranking is an analysis of which countries are better equipped to cope with the current financial crisis and improve their competitiveness in the near future. The test is future-oriented and focuses on exposure, readiness and resilience in recession.
Smaller economies scored relatively well in the new ranking. Garelli suggests smaller economies “are more fit to adapt and rebound in difficult times. Some major economies did not fare so well. The US came in at 28, Germany at 24, Japan 26, the UK at ‘disquieting’ 34, France at 44 and Russia at 51.
“In short, the stress test shows that smaller nations, which are export-oriented, resilient and with stable socio-political environments are better equipped to benefit immediately from recovery,” says Garelli. “However, only good performance by the very large exporters such as the US, Germany, China and Japan will send credible message to the world that the worst is over – change that everybody will be able to believe in.”
The 2009 IMD World Competitiveness Yearbook ranks countries on their ability to create and sustain enterprise competitiveness. The New Zealand data, compiled in partnership with the New Zealand Institute of Management, reveals an improvement on last year’s performance in two areas of the country’s competitive ranking – economic performance and infrastructure. We slipped little on government and business efficiency rankings.
IMD and NZIM identified five challenges facing New Zealand in 2009.
The challenges included the need to:
• Develop coordinated productivity strategies for sustainable business growth.
• Increase spending in transport, energy and resource infrastructure.
• Promote increased “linked” skills covering management, labour, numeracy, and literacy.
• Implement sustainable and stimulating fiscal policies.
• Introduce innovative strategies for an export-led recovery.
IMD this year ranked 57 countries on 331 criteria grouped into four competitiveness factors: economic performance, government efficiency, business efficiency and infrastructure. New Zealand slipped from 18 to 21 on business efficiency, improved one place from 22 to 21 on infrastructure, climbed from 34 to 30 on economic performance and dropped one place from six to seven on government efficiency.
New Zealand’s economic performance ranked best on low unemployment and cost of living criteria. We ranked poorly on direct investment inflows, relocation of research and development facilities, real GDP growth, our terms of trade and current account imbalance.
Our business efficiency rates best on ethical practices, attracting and retaining talent, governance standards, the stock market index and investment risk. Our brain drain, stock market capitalisation, average working hours, the international inexperience of our senior managers and unit labour costs in the manufacturing sector are weaknesses.
Our infrastructure strengths include low fixed telephone tariffs, inbound student mobility, high education achievement, high internet usage and computers per capita. Our communication technology (voice and data), environmental laws, low level of IT skills, mobile phone costs and low internet bandwidth speed are weaknesses.
Our government efficiency still rates highly. It is easy to start up businesses, tariff barriers are low, subsidies do not distort competition, employer social security contributions are fair and the labour market is flexible. Against that, we have problems with our exchange rate, high collected tax revenues, unattractive foreign investment incentives, high corporate tax rate on profits and not-so attractive personal income tax rate.
“It is gratifying to see New Zealand make some ground in its efforts to improve its international competitiveness,” said Phillip Meyer, chairman of NZIM’s National Board. “It is also pleasing to close the gap little between our performance and Australia’s. It is also good to see us perform reasonably well in the new Stress Test rankings. Hopefully they are genuine indicator of our ability to bounce back from this global recession.
“We would still like to see more significant improvement in our overall economic performance. New Zealand’s brain drain and senior management’s shortage of international experience are still problematic. But so too are the shortcomings in communications technology, IT skills, mobile phone costs and limited internet bandwidth speed
“But perhaps most concerning is the state of the nation’s finances as our debt level climbs and we witness decline in banking and financial services support for business activities.”
For further details contact:
Kevin Gaunt, 0-9-303 9100,
[email protected]
