NZ's global competitiveness falls 14 places in 16 years

New Zealand's global competitiveness falls 14 places in 16 years

New Zealand's global competitiveness fell another notch this year, according to the just released IMD World Competitiveness Yearbook, a performance survey of 60 global economies.

In the 25 years since IMD began recording global competitiveness, New Zealand's ranking has slipped 14 places from a high point of 11th in 1997 to a now middle of the field and fading 25th. This year's result is New Zealand lowest ever ranking in the IMD survey.

However, the gap between trans-Tasman neighbours New Zealand and Australia held firm this year. Both countries slipped a place in their ranking, New Zealand from 24 to 25 and Australia from 15 to 16.

Australia ranked 15th and four places behind New Zealand 16 years ago. Since then, the tables have been turned.

Australia's highest ranked position was fifth, recorded in 2010. But since the global financial crisis (GFC) Australia's fall has been both rapid and dramatic. Consequently, the competitiveness performance gap between the two economies has closed from 15 places in 2009 to nine places this year.

“It doesn't matter how we look at it, this is not a good result. It is further evidence of a trend that inhibits and threatens New Zealand's global economic performance,” said Mr Kevin Gaunt, Chief Executive of the New Zealand Institute of Management and the IMD's research partner in New Zealand.

“Our economic performance, business efficiency and infrastructure are struggling to remain static, let alone improve. Even our government efficiency, which admittedly ranks 10th in the world, is slipping,” Mr Gaunt said.

“Over the 25 years of the IMD survey, New Zealand is one of the economies that has slipped most. Countries that have fallen by similar levels are Venezuela, Spain and Greece. In a sense it's worse for us because New Zealand once ranked in the top 20 percent. Those other nations have always been in the lower half of the rankings table. We are on the cusp of falling into that same cluster.

“The Asian economies with which New Zealand increasingly trades are making great progress. We have to match them and there's really no reason why we can't. It is obvious that we have a thoroughly business friendly environment. We're not investing as much as we need to in our export efforts. Our international management skills aren't up to the job and business is not developing leaders with these competencies.

“We are still failing to provide the technological back-up needed to be globally competitive. Broadband development still lags, mobile phone costs are too high, our information technology skills leave much to be desired, and the low level of communications connectivity is problematic.

“The bright spots in the survey are too few and far between. And collectively they are insufficient to improve our economic performance and drive growth. Somehow, New Zealand must get across the message that it is a country worth investing in, worth doing business with and, given its political stability and business friendly environment, a market full of opportunities,” said Mr Gaunt.

The IMD and NZIM identified five challenges facing New Zealand in 2013, the first of which highlighted the need to strengthen New Zealand's productive performance to create a platform for growth.

The other four challenges included the need to:
• return a budget surplus by 2014/15
• continue to recover from the economic impact of the February 2011 earthquake
• build better public services through restructuring in high spending sectors
• build a nationwide ultra-fast broadband network to underpin growth.

The United States climbed back to first place as the world's most competitive economy this year, pushing last year's winner Hong Kong back to third. Switzerland moved up one slot to second having moved from 12th place 16 years ago. Sweden has climbed 15 places in 25 years to take fourth place this year. Singapore slipped a place to fifth this year. It ranked second in 1997. Mainland China continues to climb the rankings, but slowly. It's moved from 27th to 21st place in 16 years.

The IMD World Competitiveness Yearbook ranks countries on their ability to create and sustain enterprise competitiveness. The survey of 4200 international executives is based on 329 ranking criteria grouped into four competitiveness factors of economic performance, government efficiency, business efficiency and infrastructure.

ENDS

[IMD World Competitiveness Center - World Rankings: Competitiveness and austerity - the divorce?
New Zealand results summary: NewZealand.pdf]

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