IN TOUCH: NZ climbs competitive rankings

New Zealand has lifted its global competitiveness game gaining two places to rank 19th on the just released IMD World Competitiveness Yearbook.
The improvement in New Zealand’s ranking also closes the trans-Tasman gap with Australia which has slipped this year from sixth to 12th place.
The US is again number one but, according to Stephane Garelli, director of the IMD’s World Competitiveness Centre, the results this year signal “big shake up” in global economic and business power. Emerging nations are quickly catching up in competitiveness, he says.
According to Garelli, new companies and new brands are appearing all over the world and they now contest the long-standing competitive supremacy of industrialised nations. He warns that “this could lead to an increase in protectionist measures in Europe and the US”.
The IMD World Competitiveness Yearbook ranks countries on their ability to create and sustain enterprise competitiveness. The local data, compiled in partnership with NZIM highlights five significant challenges facing this country.
The first – the need to adopt education policies that focus on quality learning outcomes – is “critical if we are to lift our economic performance in an increasingly competitive world”, says NZIM national chief executive David Chapman.
The other four are the need to:
•boost the nationwide adoption of broadband communication technologies;
•tackle key infrastructure issues including water and energy supply and affordability;
•address critical primary sector climate change issues and policies; and
•encourage more companies to export.
Under the four major category areas, New Zealand improved on business efficiency, held steady on infrastructure, and climbed from 12th to sixth place on government efficiency but slipped badly from 28th to 40th place on economic performance.
Looking at each area in more detail, we rank highly on business efficiency in terms of social responsibility of business leaders and ethical business practices but fall down when it comes to having readily available skilled labour base.
On infrastructure we do okay on pollution problems and quality of life but are bottom of the table when it comes to meeting business communications technology needs. In terms of government efficiency, we rank highly in areas such as protectionism, subsidies, bribery and corruption but don’t when it comes to investment incentives, cost of capital, real corporate taxes and short-term interest rates.
New Zealand’s strength in economic performance comes from its positive employment environment but weaknesses show up in our low real GDP growth rate, exchange rates and low direct investment inflows – all familiar problems.
The lift in New Zealand’s competitiveness this year is “encouraging”, says Chapman. “But it doesn’t go far enough and isn’t as significant as we’d like. However, it’s good to see some improvement in important areas like direct investment inflows, consistent government policy direction and the management of public finances.
“On the other hand, the decline in GDP growth is worrying. So too is the decline in IT skills and our inability to meet business communications technology needs.
“Most alarming for us is the decline in higher education achievement as percentage of the population achieving tertiary qualifications. This is critical issue.”
However, he takes heart from the narrowing gap in competitiveness across the Tasman.
“As I said last year, much of the solution to New Zealand’s enhanced global competitiveness rests with positive attitudes toward better and more sustained management education and training – starting at secondary school.”