Small lift in New Zealand's global competitiveness

New Zealand has improved one place to 18th out of 55 on the world competitiveness scoreboard according to the just released IMD World Competitiveness Yearbook.

The improvement has not, however, closed the trans Tasman gap with Australia which has climbed five places to rank 7th in the world.

The USA is again number one but, Professor Stephane Garelli, Director of the IMD’s World Competitiveness Centre, warns that it was Japan's financial collapse in the early 1990s, not unlike that now taking place in the US, that stripped it of its previous first place ranking. Japan is now a mid field performer at 22nd .

“The past crisis in Japan bears some resemblance with the present turmoil in the US,” said Professor Garelli. He concedes, however, that the differences in the two economic societies are quite large. “The US, because of its openness, resilience and entrepreneurship, always seems to find ways to reinvent itself that Japan - and much of Europe – often lacks,” he said in releasing this year's survey results. 
 
The 2008 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, reveals little improvement on last year's performance in most areas of the country’s competitive performance.

IMD and NZIM identified five challenges facing New Zealand in 2008. The first, the county's need to increase its focus on vocational education for young people, is critical if New Zealand is going to enhance its economic performance and compete effectively in an increasingly competitive world marketplace, says NZIM National Chief Executive Mr. David Chapman.

The other four challenges included the need to:

Tackle water, transport and energy infrastructure issues
Extend the availability and take-up of broadband technology
Review the impact of emerging carbon trading policies
Introduce innovative productivity strategies. 

IMD this year ranked 55 countries on 331 criteria grouped into four competitiveness factors: economic performance, government efficiency, business efficiency and infrastructure. New Zealand remained static on business efficiency, improved one place on infrastructure, climbed from

40th to 34th place on economic performance and remained at 6th place on government efficiency.

New Zealand's economic performance ranked best on low price performance and

high employment levels. We continue to rank poorly on issues such as real GDP growth, high exchange rate and uncompetitive international trade and investment practices and policies.

Our business efficiency still rates best on factors such as ethical practices, health, safety and environmental concerns, corporate governance performance, the social responsibility of our business leaders and our banking regulations which do not, in the surveyors' view, hinder business development. We rate worst in this category on our shortage of skilled labour, our brain drain, working hours, stock market capitalisation and the lack of international experience our senior managers have.

When it comes to infrastructure, New Zealand scores highly on its inbound student mobility, total public expenditure on education, its shortage of pollution problems, high number of internet users and high level of secondary school enrolments. We score badly on the deployment of communications technology that meets business needs, investment in telecommunications, mobile phone costs, the availability of IT skills and our worldwide share of computers in use.

Our government efficiency rates at the very top on five points: the lack of distorting subsidies; the absence of protectionism; no bribery and corruption to speak of; no parallel (black) market and no price controls. Weaknesses include central bank policies that have a negative impact on economic development, our high short term interest rates, high cost of capital, a shortage of investment incentives and our relatively high corporate tax rates.

“As a more competitive nation we didn't make much ground this year but, at least we did not go backwards,” said Mr. Chapman. “It is also disturbing to see the gap between our performance and Australia's widen yet again.

“The big issues for us are still our overall mediocre economic performance, our brain drain, our shortage of skilled labour and our inability to attract positive direct investment. Our shortage of communications technology investment and high costs of some technology services, such as mobile, is also an ongoing concern for New Zealand.

“Again this year we are concerned that the level of higher education ranks mid field at 23rd on the scale, as does our level of management education (22nd) required to meet the needs of a competitive society. As I said last year and the year before that, 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 the secondary school level and continuing through trade training.”