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NZ Slips In World Competitiveness

Press Release
May 4, 2004.

NZ Slips In World Competitiveness

New Zealand has slipped two places to rank 18th on the just-released world competitiveness scoreboard. And the gap between us and Australia has widened with Australia moving up from 7th to 4th place, behind USA, Singapore and Canada.

New Zealand retained its 13th place 2003 ranking amongst smaller countries with populations of less than 20 million, but slipped behind Taiwan and Malaysia in both the Asia-Pacific region and the worldwide ranking. New Zealand was 4th on the Asia-Pacific scoreboard last year. We now rank 6th out of 15 regions listed.

The 2004 IMD World Competitiveness Yearbook ranks 60 countries on their ability to “create and maintain an environment that sustains the competitiveness of enterprises”. The New Zealand data, compiled in partnership with the New Zealand Institute of Management, reveals strengths, weaknesses and some serious challenges for the local economy.

On the upside, New Zealand ranks highly on exports of commercial services, gender income ratio, per capita arable area, education spending, start-up time for new business, females in management positions and in parliament and the level of our Government surplus/deficit. But our stock market index, indirect taxation, current account balance, exports, direct inward investment flows and R& D spend are all well down the international competitiveness scorecard.

The nation’s challenges for the year as identified by NZIM for the survey include: encouraging foreign investment by reducing corporate tax rates ; encouraging access to foreign markets through free trade agreements (China, US); diversifying our business product base and increasing added value components; expediting government and private sector commitment to education strategies and retaining skilled workers and improving business growth prospects by reducing legislative impediments and compliance costs.

The biggest development in world competitiveness is the emergence of Asia, globally, as a dominant competitive force, according to IMD’s, Professor Stephane Garelli. “The structure of the world economy is different now,” he said.

A new breed of competitor is emerging, mainly from Asia but increasingly Central Europe. These enterprises are not just manufacturing for the West but creating their own brands. These nations, says Professor Garelli, are quickly absorbing world standards in management and technology which are spread by off-shoring activities. “They will assail Western markets, as Japan did before, but on a much wider scale.”

“Our relatively poor showing in this latest IMD survey again highlights the need for New Zealand organisations to lift their management capability and performance,” says NZIM National Chairman Tony Hassed. “But it also point out that in some areas we are again legislating against efficiency.”

“For instance, the survey now ranks us at 55th place for introducing new legislation that restricts the competitiveness of enterprise. It also suggests that our investment incentives are not attractive to foreign investors (53) and that our real corporate taxes discourage entrepreneurial activity (45). And we rank dead last (60) for our environmental laws and compliance which hinder competitiveness.”

“Having said that, we are top when it comes to Government Efficiency on issues like price controls, we have none, protectionism in the economy and we have no subsidies that impair economic development. We are also number one when it comes to ethical business practices.”

“We should also note the enterprise changes in Asia and take on board their willingness to embrace world management standards. New Zealand has such as lot going for it,” said Mr Hassed “that I’m convinced that if we could get our top managers to perform to the best of their ability and help them to lift the competence of the rest of their management teams we would start to turn some of these indicators around.”


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