Over the past year, New Zealand has managed to turn its global competitiveness around and clawed back two places to rise to 23rd in the World Economic Forum's Global Competitiveness Index, improving on 2011's score of 4.93 to 5.09.
New Zealand lifted its ranking in 9 of the 12 pillars of competitiveness measured by the 2012 Global Competitiveness Index, and is particularly strong in institutions, health and education, goods and labour market efficiency and financial market development. However, macroeconomic factors, infrastructure and innovation are constraining overall performance.
Switzerland topped the overall rankings for the fourth consecutive year, followed by Singapore and Finland. The United States declined for a fourth consecutive year down to seventh place, and Hong Kong replaced Denmark in the top 10, while Australia held steady at 20th.
China (29th) continues to be the most competitive of the large emerging BRIC economies. Of the others only Brazil (48th) moved up this year, with South Africa (52nd), India (59th) and Russia (67th) experiencing small declines in rankings.
So, how can we pull our socks (and scores) up?
Performance in innovation and sophistication factors remains the greatest challenge (and opportunity) for New Zealand. Areas that most constrain competitiveness include the state of cluster development, government procurement of advanced technology products, availability of scientists and engineers and value chain breadth of exporting companies.
New Zealand business leaders also cited inadequate infrastructure and an inefficient bureaucracy as two of the most significant barriers.
The results were released locally by think tank the New Zealand Initiative (see presentation here), and executive director Dr Oliver Hartwich says despite the lift in ranking and overall score New Zealand’s performance remains weak compared other OECD countries and the 35 most innovation-driven economies around the world.
“Both government and businesses need to address areas of under-performance such as clustering, innovation capacity, access to financing, hiring and firing practices, supply of scientists and engineers,” he saisd.
“The government’s budget and debt management, New Zealand’s restrictive regime on foreign direct investment, and the regulation of product markets need to be the focus of improvement. We should also increase efforts to attract highly qualified migrants for sectors in which we experience skills shortages.”
Over the past few years the WEF has been developing a sustainable competitiveness framework for comparing nations. An assessment of 79 countries was included in the 2012-13 report. The main finding was that there is no necessary trade-off between being competitive and being sustainable.
When the additional 18 indicators were applied, New Zealand’s overall ranking improved between +5 percent to +15 percent for both environmental and social sustainability, performing better than Australia on the environmental pillar.