New Zealand’s global competitiveness slides again

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New Zealand’s global competitiveness slides again

New Zealand’s global competitiveness continues to slide, according to the just released IMD World Competitiveness Yearbook. This year it has slipped one place to rank 21st, out of 59 economies. Last year New Zealand slipped five places, from 15th to 20th.

Our ranking against Australia has, however, improved. Australia slipped four places this year from 5th to 9th. There is obviously still a significant trans Tasman gap.

America clawed its way back to share first place with Hong Kong as the world’s two most competitive economies. Last year the US slipped, for the first time, to 3rd place. Singapore has dropped from its top spot in 2010 to third as Hong Kong and the US moved past it.

The recovery of financial markets has pushed the US back to the top with Hong Kong, “slightly ahead of Singapore”, said Professor Stephane Garelli, Director of the IMD’s World Competitiveness Centre. “Sweden jumps to 4th place (from 6th last year) highlighting the competiveness of the Nordic model,” he added. “Germany climbed six places from 16th to 10th, thanks to buoyant exports and a more flexible labor market”.

New Zealand's performance slipped across all four competitive measures. Its economic performance fell from 31 to 33, business efficiency dropped two places from 22 to 24, Government efficiency fell three places, from 5 to 8 and the country’s infrastructure performance drop one place to rank 23rd. The cumulative result was a one point drop in the country’s overall competitiveness performance.

The survey this year grew with the addition one new country, the United Arab Emirates which came in at 28th.

“The world of competitiveness is becoming more national,” said Prof Garelli. “World Competitiveness 2.0 is characterised by a greater self-reliance of countries. It increasingly emphasises re-industrialisation, exports and a more critical look at delocalisation. This trend is triggered by the rise in commodity and transport prices and higher labour costs in emerging economies. National champions are favoured everywhere and borders re-surface – again!” he said.

The 2011 IMD World Competitiveness Yearbook ranks countries on their ability to create and sustain enterprise competitiveness. The New Zealand data, compiled in partnership with the New Zealand Institute of Management, is disappointing but perhaps not surprising, according to NZIM Northern Chief Executive Mr. Kevin Gaunt, the Institute's spokesperson on the survey.

IMD and NZIM identified five challenges facing New Zealand in 2011. The first, recovery from the high costs (about $15 billion) of the Canterbury’s February earthquake, is still having a significant impact on the country’s slowly recovering economy.

The other four challenges, three of which remain the same as last year, included the need to:
• Initiate long term growth by improving access to capital and world markets.
• Encourage savings, create incentives and boost productivity through taxation reform.
• Build a nationwide ultra-fast broadband network to underpin growth.
• Address education gaps and skills shortages in a limited population environment.

IMD this year ranked 59 economies on more than 300 criteria grouped into its four competitiveness factors of economic performance, government efficiency, business efficiency and infrastructure.

“Sadly, New Zealand’s international competitiveness continues to decline,” Mr. Gaunt said when the figures were released today. “We may have improved three places against Australia but that was not of our making – rather it was because their performance has slipped by a greater margin than ours."

“New Zealand’s business leadership still needs to get its collective head around the global changes that are taking place and to realise that there are trading opportunities out there, particularly in Asian markets. We must be more disciplined and committed in our approach to finding and developing them,” he said.

“The big issues for New Zealand are still our mediocre economic performance, our inability to attract investment funds, our corporate tax rates, unemployment legislation, the brain drain and the high cost of some communication services, such as mobile technology, is also an ongoing concern for New Zealand.

“As I said last year, our senior managers still lack the kind of international experience they need to compete globally. And we still need to export more. Unfortunately we seem disinclined to help our managers grow their global understanding and experiences. Enhancing New Zealand’s global competitiveness lies in a significantly changed mindset. Organisational leaders and the government need to develop more positive attitudes toward better and more sustained management education and training, starting at the secondary school level and continuing through trade training. And the relationship between enhanced productivity and economic performance is linked directly to greater management capability. We now have the research – in last year’s Management Matters study - to verify that. What remains is to act on the findings of that research,” said Mr Gaunt.

ends

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