UPfront Kiwi competitiveness languishes in mid-field

We may be doing okay on the rugby field but in terms of overall world business competitiveness, New Zealand is stuck in mid-field.

When benchmarked against other economies in the just-released IMD World Competitiveness Yearbook 2003, our results show little improvement on last year. little sashay one step up the rankings to 18th overall out of 59 countries only shows up when smaller and larger economies (populations either under or over 20 million) are aggregated. Amongst the smaller economy grouping, which is headed by Finland, Singapore and Denmark, New Zealand remains stuck at number 14.

Rugby aside, competitiveness across the Tasman looks altogether more robust with Australia making number two, behind the US and ahead of Canada, amongst the larger economies and 9th equal overall. The bottom feeders include Argentina and Venezuela, ranked 29 and 30 in the over 20-million group; and Jordan and Slovenia (28 and 29) amongst the smaller economies.

First published in 1989, the IMD World Competitiveness Yearbook analyses and ranks the ability of nations to provide an environment that sustains the competitiveness of enterprises. This year 59 economies were ranked using 321 criteria to measure four competitiveness clusters:
* economic performance;
* government efficiency;
* business efficiency; and
* infrastructure.

When the strongest and weakest criteria are teased out in each of these clusters, it’s possible to see where things are going well and where our performance could be improved.

For instance, in the economic performance category, New Zealand ranks highly on such criteria as the cost-of-living index (ranked number one), employment growth (read GDP growth), employment and economic resilience. The “could do better” criteria includes the ability to attract inward investment, direct investment flows abroad, and commercial services export.

In terms of government efficiency, New Zealand earns top ranking for lack of interference in controlling prices or giving subsidies, independence and lack of corruption as well as its employment of women. However, it doesn’t provide incentives for foreign investors and new legislation discourages competitiveness.

The “flexibility and adaptability” of our people is plus in terms of business efficiency – the fact we keep losing them offshore minus.

In the infrastructure category, we rank highly for patent productivity, adult literacy and sheer physical space but fall down on the hindrance factor of environment laws, number of mobile phones and size of population.

This year was the first that the New Zealand Institute of Management acted as one of IMD’s partner institutes in gathering survey data. Input is provided by interviewing panel of 4000 executives from 110 countries.

NZIM helped IMD identify five key challenges this country needs to address in future. These are:
* Diversify its product base and increase added-value components;
* Improve international sales and marketing performance for products;
* Improve access into foreign markets, reducing international trade barriers;
* Increase the supply of skilled labour and investment in human capital;
* Reduce local business impediments, increase infrastructure investment and develop state-business partnerships.

Suffering economic anaemia
“The good news is that the world economy is not in recession. The bad news is that nobody believes it.”

That’s the conclusion of Stephane Garelli, director of the IMD’s World Competitiveness project, after analysing data from 59 countries and finding that only four had seen contraction of their GDP during 2002.

However, two major sectors are in the midst of restructuring:
* IT, formerly the locomotive of world competitiveness; and
* banking and finance – former buffer in case of economic slowdown. Weakness in both sectors will delay economic recovery this year, says Garelli.

He also identified two ticking timebombs – corporate debt, now at an all-time high; and pension funds, which have lost megabucks.

And while the world isn’t in recession, Garelli diagnoses it as having “economic anaemia” which, he says is more pernicious and just as bad.

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