NZ competitiveness improves, but innovation and infrastructure lag
By Pattrick Smellie
Sept. 5 (BusinessDesk) - New Zealand has improved one place to be ranked 17th most competitive country in the world, as measured by the Global Competitiveness Index compiled this year for the 14th time by the Davos, Switzerland-based think tank, the World Economic Forum.
That's the best ranking for New Zealand since the index began, but the picture has changed little in terms of the country's strengths and weaknesses, with property rights, institutional arrangements, high integrity and sound legal and political systems pushing New Zealand's ranking five ahead of Australia, which fell to 22nd place in the overall index, and infrastructure and innovation measures pulling the country down.
The three "most problematic factors" for doing business in New Zealand are identified as inadequate supply of infrastructure, inefficient government bureaucracy, and insufficient capacity to innovate, based on interviews with 42 senior business leaders, coordinated by lobbyist Business New Zealand and the New Zealand Initiative, a business-funded think thank.
New Zealand was first or second-ranked on several key indicators of trustworthiness, including the sixth-highest score for trust in politicians, along with high scores for primary school education quality and health, at fourth in the world.
"In particular, New Zealand ranks third in the financial market development pillar," the forum's report says. "It boasts an excellent education system, while the efficiency of its goods and labour markets is amongst the highest in the world."
However, the adequacy of New Zealand's infrastructure ranked 29th in the global index, pulled down by relatively low penetration of the population by mobile technologies.
Scores for business sophistication and innovation sat at 24th and 23rd respectively, while technological readiness ranked 23rd in the world. While New Zealand ranked 15th in the world on "capacity for innovation", availability of scientists and engineers was ranked 40th and government procurement of high tech products was ranked 71st.
Switzerland retained its top spot as the world's most competitive economy, followed by Singapore and the United States, which were also second and third respectively in 2013.
Japan ranked seventh, the United Kingdom 10th and mainland China placed at 28th, the most competitive of the so-called BRICS economies: Brazil, Russia, India, China and South Africa.
China was weak on technological readiness measures, at 83rd in the index, there were during problems in Chinese financial market development that made access to loans "very difficult" for small businesses, and while "functioning of the market" improved, "various limiting measures and barriers to entry, along with investment rules, greatly limit competition," the WEF report says.
"China is becoming more innovative (32nd) but it is not yet an innovation powerhouse."