New Zealand's global competitiveness falls again

New Zealand's global competitiveness has fallen to its lowest level ever according to the just released IMD World Competitiveness Yearbook. The nation's competitiveness slipped three places to rank 24th out of 59 economies.

The country's ranking has fallen from 15th place in 2009, our highest ever listing, to record its lowest point since 1989 when IMD started publishing its report on the competitiveness of nations. The gap between New Zealand and Australia has, however, narrowed. Australia took an even bigger hit this year falling from 9th to 15th place. Australia has now slipped 10 places from 5th in two years.

Hong Kong is now the world's most competitive economy, a slot it shared with the United States last year. The United States is now in second place ahead of Switzerland which climbed two places to third this year. Singapore and Sweden rank fourth and fifth. Canada, Taiwan, Norway, German and Qatar make up the rest of the top 10.

"America's competitiveness has a deep impact on the rest of the world," said Professor Stephane Garelli, Director of the IMD's World Competitiveness Centre. "It uniquely interacts with every economy, advanced or emerging. No other nation exercises such a strong 'pull effect' on the world. Europe is burdened with austerity and fragmented political leadership. A southern block of emerging markets is still work in progress. In the end, if the US competes, the world succeeds,"he added.

The recession has made the world economy more fragmented and diverse than ever, according to Garelli. This is forcing companies to operate several parallel business models. "Emerging economies are relying on domestic demand and national champion companies to insulate themselves from economic turmoil, while the submerging developed economies are turning to re-industrialisation. In both cases, economic nationalism is back and protectionism is tempting," he said.

New Zealand's performance slipped across all four competitive measures. Its economic performance fell from 33 to 41, business efficiency dropped four places from 24 to 28, Government efficiency slipped two places, from 8 to 10 and the country's infrastructure performance dropped one place to rank 24th. The cumulative result was a three point drop in the country's overall competitiveness performance.

The 2012 IMD World Competitiveness Yearbook ranks countries on their ability to create and sustain enterprise competitiveness. The New Zealand data for the IMD survey is compiled in partnership with the New Zealand Institute of Management. "I can't say I am surprised by the New Zealand results said NZIM Chief Executive Mr. Kevin Gaunt. "They point up the need for business leaders and politicians alike to do something about lifting economic activity and developing managers with the skills to deliver better organisational performance.

IMD and NZIM identified five challenges facing New Zealand in 20112, the first of which called for a strengthening of the country's comparative OECD productivity performance.

The other four challenges included the need to:
• Return the country to a fiscal surplus by 2014
• Continue to recover from the economic impacts of the Canterbury earthquakes
• Build better public services through restructuring , efficiencies and cost reduction
• Build a nationwide ultra-fast broadband network to underpin growth.

The IMD survey is based on 329 ranking criteria grouped into four competitiveness factors of economic performance, government efficiency, business efficiency and infrastructure. The survey of 4200 international executives this year reveals a growing skepticism in some of the 59 countries measured toward globalisation and the need for economic reforms.

"This year's survey results are worrying," said Mr. Gaunt said "Our performance is down in just about every critical area. We may be holding our own against Australia but that is cold comfort when both our economies are failing against the world's other countries - even European countries that are wracked by economic and political problems."

"Undoubtedly the Canterbury earthquakes have, and still are, impacted our economy badly. But our 8 place fall in economic performance should not also be accompanied by such significant falls in business and government efficiency. And we are not making progress in key infrastructure areas.

"We are still not attracting offshore investment, were not exporting enough and there's no GDP growth. On the people front we are confronted with a continuing high brain drain , though it is up marginally on last year, and our employee training record has slipped significantly.

"There is, as I said last year, a direct relationship between enhanced economic performance and greater management capability. We must lift lifting management capability if New Zealand is to survive the difficult times it now faces and stop this slide in global competitiveness," said Mr Gaunt.

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