This world's most authoritative index on national competitiveness ranks us just behind Germany (15th), the United Kingdom (16th), Norway (17th), and five places behind Australia (14th). Published yearly since 1989, the index ranks and compares the competitiveness of 49 countries on the basis of 314 criteria including economic performance, government, business efficiency and infrastructure.
The world's competitiveness environment is currently characterised by nervousness and unpredictability, according to Christchurch-based NZIM National Board director and Business New Zealand president, Doug Marsh, who was recently briefed by the Switzerland-based IMD.
In terms of world competitiveness, 2001 was a year to forget, said Marsh. Tougher than anticipated, 2001 was expected to be a year of technical correction after the exuberance and excesses of 1999 & 2000. Reality proved somewhat different: the world economy suddenly lost momentum and the stock market plunged, dragged down by the technology sector slump.
Despite the two negative trends of economic slowdown and market consolidation, the continuing growth in the size of the world markets remains the most fundamental long-term factor affecting world competitiveness. It now takes only 12 years to add a billion people to the world's population, compared with 123 years between 1804 and 1927. By 2050, the population of Europe will have decreased by 100 million people to 628 million. Everywhere else it will continue to grow. In the United States, the population will increase from 305 million to 392 million, in Latin America from 504 million to 809 million, in Africa from 749 million to 1.766 billion, and in Asia from 3.585 billion to 5.268 billion.
The IMD views New Zealand as one of the "purest" of the Anglo-Saxon behavioural models of society, according to Marsh, an economy that is characterised by deregulation, privatisation, a degree of labour flexibility and a higher acceptance of risk." But our government has the difficult task of striking a balance between a hyperactive global business environment which fosters entrepreneurship, pressure from New Zealand business leaders for innovative economic growth strategies and a more socially responsible environment" he said.
"Although New Zealand's middle and top level management indicate their optimism about state efficiency, an independent public service, lack of protectionism, transparency of government policy and lack of improper practices, they are more critical about new legislation encouraging competitiveness, environmental laws and compliance as impediments to growth (ranked 47th), incentives attracting direct foreign investment (45th) and corporate taxes that discourage entrepreneurial activity (38th)."
New Zealand also fared less well in retaining talent. The brain drain is dramatically high (45th) and it only ranked 44th for the international experience of its senior managers.
New Zealand ranked 34th in availability of competent managers, 31st for overall productivity real growth and 35th for skilled labour availability. "In terms of sustainable economic growth, New Zealand business should be seriously concerned about the implications of these index ratings," said Marsh.
Marsh expressed concern that overall New Zealand's management practices ranked 15th. Even more concerning was the 26th place ranking of managers' credibility and 25th ranking of effectively managed shareholder value. Managers adaptability ranked 15th, corporate boards' effectiveness managing company performance ranked 13th, marketing effectiveness 18th, customer satisfaction and social responsibility 16th.
Whereas business efficiency at 22nd has fallen from its 16th place ranking in 1999; government efficiency has fallen from 8th in 1999 to 16th place. Notwithstanding real improvement has occurred in the criteria for determining New Zealand's value system. The country benefits from a population that is regarded as flexible and adaptable when faced with challenges (4th from 22nd last year), with a high percentage of females in senior political or economic responsibility (3rd) and ranking 7th for the gender income ratio (females' earnings compared to males). …