NZIM: Slip sliding away

The mainstream media didn’t pay it much mind but last month New Zealand’s global competitiveness fell to its lowest level ever. According to the Swiss-based IMD World Competitiveness Yearbook, we slipped three places to rank 24th out of 59 measured economies.
The country’s global competitiveness ranking has, therefore, fallen from 15th place in 2009, our highest listing, to reach its lowest point since 1989 when IMD started publishing its report on the competitiveness of nations.
The only good news, if you could call it that, is that the performance gap between New Zealand and Australia has narrowed. Australia took an even bigger hit this year, falling from 9th to 15th place. Our partners across the ditch have now slipped 10 places in two years, one slip worse than us.
We need to pay the most attention to the changes at the top of this global ranking. Hong Kong is now the world’s most competitive economy. It shared the slot with the United States last year, but the US is now in second place, ahead of Switzerland which climbed two places to third. Singapore and Sweden rank fourth and fifth while Canada, Taiwan, Norway, Germany and Qatar make up the rest of the top 10.
“America’s competitiveness has deep impact on the rest of the world,” said professor Stephane Garelli, director of the IMD’s World Competitiveness Centre, when he released the latest findings. “It uniquely interacts with every economy, advanced or emerging. No other nation exercises such strong ‘pull effect’ on the world. Europe is burdened with austerity and fragmented political leadership. southern block of emerging markets is still work in progress. In the end, if the US competes, the world succeeds,” he added.
The recession has made the world economy more fragmented and diverse than ever, according to Garelli. This is forcing companies to operate several parallel business models. “Emerging economies are relying on domestic demand and national champion companies to insulate themselves from economic turmoil, while the submerging developed economies are turning to re-industrialisation. In both cases, economic nationalism is back and protectionism is tempting,” he said.
That might all be true. But New Zealand’s steady decline needs to be addressed both at the individual organisational level and also at the political policy and economic environment level. The Productivity Commission has been established and the IMD result suggests it will have its work cut out to make an impact.
Disturbingly, New Zealand’s performance slipped across all four competitive measures used by IMD. That collective fall suggests managers and policymakers alike are letting things slip.
The country’s economic performance fell from 33rd to 41st place. Our business efficiency dropped four places from 24 to 28, government efficiency slipped two places, from eight to 10 and the country’s infrastructure performance dropped one place to rank 24th. The drop in economic performance puts us close to the tail end of the field. Given our proximity to the stronger-performing Asian markets, we should be doing better.
The IMD survey ranks countries on their ability to create and sustain enterprise competitiveness. The New Zealand data for the survey is compiled by IMD in partnership with the New Zealand Institute of Management. “I can’t say I am surprised by the New Zealand results,” says NZIM chief executive Kevin Gaunt. “They point to the need for business leaders and politicians alike to do something about lifting economic activity and developing managers with the skills to deliver better organisational performance.”
IMD and NZIM identified five challenges facing New Zealand in 2012, the first of which called for strengthening of the country’s comparative OECD productivity performance.
The other four challenges included the need to:
• Return the country to fiscal surplus by 2014;
• Continue to recover from the economic impacts of the Canterbury earthquakes;
• Build better public services through restructuring, efficiencies and cost reduction; and
• Build nationwide ultra-fast broadband network to underpin growth.
The IMD survey is based on 329 ranking criteria grouped into four competitiveness factors of economic performance, government efficiency, business efficiency and infrastructure. The survey of 4200 international executives this year reveals growing scepticism in some of the 59 countries measured toward globalisation and the need for economic reforms.
“This year’s survey results are deeply worrying,” says Gaunt. “Our performance is down in just about every critical area. We may be just holding our own against Australia but that is cold comfort when both our economies are failing against the world’s other countries – even European countries that are wracked by economic and political problems.
“Undoubtedly the Canterbury earthquakes have impacted, and continue to impact, on our economy badly. But our eight place fall in economic performance should not also be accompanied by such significant falls in business and government efficiency. And we are not making progress in key infrastructure areas.
“We are still not attracting offshore investment, we’re not exporting enough and there’s no GDP growth. On the people front we are confronted with continuing high brain drain, though it is slightly better than last year, and our employee training record has slipped significantly.
“There is, as I said last year, direct relationship between enhanced economic performance and greater management capability. We must lift management capability if New Zealand is to survive the difficult times it now faces and stop this slide in global competitiveness,” says Gaunt.
“Our problems are people-problems. Our approach to management development must change. Managers hold the key to turning New Zealand’s global and local trading fortunes around. But they need to be turned on to the opportunities. recession is not an excuse for not performing. Non-performance is state of mind. Think recession and managers perform in recessionary way. It is time to be optimistic, to invest in managers and power them up to perform.” M

Reg Birchfield FNZIM is writer on leadership, governance & management. [email protected]

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