NZ slips down international competitiveness ladder

New Zealand's international competitiveness gets a "must try harder" rating in the latest survey compiled by the Swiss business school IMD.

The 2004 IMD World Competitiveness Yearbook ranks New Zealand 18th, down two places from last year.

The gap between New Zealand and Australia has widened, with Australia moving up from 7th to 4th place, behind the US, Singapore and Canada.

New Zealand retained its last year's rank of 13th among countries with populations of less than 20 million, but slipped behind Taiwan and Malaysia in both the Asia-Pacific region and the worldwide ranking.

New Zealand was 4th on the Asia-Pacific scoreboard last year but has slipped to 6th this year.

The survey ranks 60 countries on their ability to "create and maintain an environment that sustains the competitiveness of enterprises".

The New Zealand data, compiled in partnership with the New Zealand Institute of Management, reveals strengths, weaknesses and some serious challenges for the local economy.

New Zealand ranks highly on exports of commercial services, gender income ratio, per capita arable area, education spending, start-up time for new business, females in management positions and in Parliament and the level of the Government surplus/deficit.

But the stock market index, indirect taxation, current account balance, exports, direct inward investment flows and R&D spend are all well down the international competitiveness scorecard.

The nation's challenges for the year as identified by NZIM for the survey include: encouraging foreign investment by reducing corporate tax rates; encouraging access to foreign markets through free trade agreements (China, US); diversifying business product base and increasing added-value components; expediting government and private sector commitment to education strategies, and retaining skilled workers and improving business growth prospects by reducing legislative impediments and compliance costs.

NZIM national chairman Tony Hassed said the poor showing highlighted the need to lift management capability and performance.

"But it also points out that in some areas we are again legislating against efficiency," he said.

"For instance, the survey ... suggests that our investment incentives are not attractive to foreign investors and that our real corporate taxes discourage entrepreneurial activity.

"Having said that, we are top when it comes to Government efficiency on issues like price controls ... and we have no subsidies that impair economic development," Hassed said.

"We are also number one when it comes to ethical business practices."

Top competitors (2003 ratings in brackets)

1. United States (1)

2. Singapore (4)

3. Canada (6)

4. Australia (7)

5. Iceland (8)

6. Hong Kong (10)

7. Denmark (5)

8. Finland (3)

9. Luxembourg (2)

10. Ireland (11)

18. New Zealand (16)