Competitiveness ranking constrained by innovation performance
09 Sep 2010
New Zealand has ranked 23rd out of 139 in the World Economic Forum’s annual Global Competitiveness Report, down from 20th last year. New Zealand’s competitiveness score fell very slightly (4.92 from 4.98) but it was overtaken by Qatar, Luxembourg and Saudi Arabia, countries that are lifting their competitiveness.
The New Zealand Institute Director, Dr Rick Boven, says “The drop in overall ranking is disappointing and results from insufficient effort to lift innovation performance over a long period of time. Innovation drives the competitiveness and prosperity of advanced economies. Now that innovation is on Government’s agenda, innovation and competitiveness should improve, but only if sufficient investment and effort is made in the most important areas. It will take time to lift the competitiveness rankings.”
Switzerland is once again ranked the world’s most competitive nation. The country is characterised by an excellent capacity for innovation and a very sophisticated business culture. Its scientific research institutions are among the world’s best, and the strong collaboration between academic and business sectors, combined with high company spending on research and development, ensures that much of this research is translated into marketable products and processes.
Sweden moved up two places to claim 2nd position this year and Singapore, the highest-ranked country from Asia, maintained its position at 3rd place. The United States fell two places from 2nd to 4th continuing the decline that began last year as a number of weaknesses have continued to deepen, including a lack of macroeconomic stability.
Germany moved up two places to 5th, leading the Eurozone countries. Nordic countries continue to be well positioned in the ranking, with Sweden, Finland (7th) and Denmark (9th) among the top 10, and Norway at 14th. China continued its climb up the rankings from 29th to 27th, while the three other BRIC economies, Brazil (58th), India (51st) and Russia (63rd) remained stable.
The Global Competitiveness Index is made up of three sub-indices: basic factors; efficiency factors; and most important for advanced economies, business sophistication and innovation factors.
New Zealand continues to perform strongly on basic factors, ranking 14th overall, with high world rankings in institutions; health and primary education. The macroeconomic ranking also rose as Government’s debt performance ranking improved substantially because of declines in other countries. However, the infrastructure ranking is low at 37th, with electricity, road, rail and mobile telephone subscriptions being areas with relatively poor rankings.
Performance in efficiency factors is not quite as strong, with New Zealand ranking 18th overall. While New Zealand’s market efficiencies (goods, financial and labour markets) and higher education and training rank in the top 13 economies, technological readiness is an area of relative weakness. The extent that FDI brings new technology into the country is an area of particularly poor performance (59th). New Zealand’s small size and the scale of trade and exports remain a significant challenge.
Innovation and business sophistication factors are recognised as being the most important for innovation-driven economies. Improving performance on these factors remains the greatest challenge for New Zealand. Despite much recent attention and some investment of effort, New Zealand’s performance remains poor among the peer group of 32 innovation-driven advanced countries, ranking 28th overall and having fallen one rank since last year.
The quality of New Zealand’s scientific research institutions, the level of university collaboration with industry in R&D, willingness to delegate authority, and the quality of local suppliers are areas where the country performs well on innovation and business sophistication. However New Zealand is ranked below 50th of 139 countries for the value chain breadth of exporting companies, state of cluster development, availability of scientists and engineers, the competitive advantage in international markets of more unique products and processes, government procurement of advanced technical products and the quantity of local suppliers.
Dr Boven says that the survey highlights several government policy opportunities that would positively influence competitiveness. These include increasing the national savings rate, encouraging cluster formation and development, using government procurement to develop advanced technical products, assisting to attract, retain and develop scientists and engineers and continuing to invest in infrastructure that lifts productivity.
A customised presentation by The New Zealand Institute setting out the highlights for New Zealand is available on http://www.nzinstitute.org
Further information is available at http://www.weforum.org.
Complete rankings are at: http://www.weforum.org/documents/GCR10/Full%20rankings.pdf
The full reports for all countries is at: http://www.weforum.org/documents/GCR10/index.html
For more information please contact:
Dr Rick Boven, Director, The New Zealand Institute, Ph: 09 309 6230
Email: