Slide in world ranking a warning says business

By BRIAN FALLOW

The decline in New Zealand's ranking in the World Economic Forum's competitiveness index is a wake-up call, says Business New Zealand.

The Geneva-based forum is funded by 1000 of the largest corporations and is best known for hosting annual gatherings of the world's rich and powerful in Davos.

It compiles a growth competitiveness index, based on three broad categories of variables it considers drive economic growth in the medium and long term: technology, public institutions and the Macro-economic environment.

New Zealand's ranking has slipped from 10th last year to 16th in the latest report.

New Zealand continues to rank highly (fourth of the 80 countries covered) on the quality of its public institutions, a measure that includes levels of corruption and the integrity of the legal system, but it slipped from 11th to 27th place on technology.

"Of particular concern are poor rankings for innovation at the level of firms [63rd], Government prioritisation of information and communications technology [52nd] and private sector R&D spending [28th]," said Business New Zealand chief executive Simon Carlaw.

New Zealand's ranking on the macro-economic environment has also slipped, from 14th to 17th, reflecting comparatively high levels of Government spending and a low national savings rate.

The forum also compiles an index of micro-economic competitiveness, reflecting the business environment (infrastructure, red tape and so on) and the comparative sophistication of companies.

New Zealand ranks 22nd, but within that scores better for the business environment than for corporate performance.

That is characteristic, the forum says, of countries whose leading companies still rely on resource extraction or are local subsidiaries of multinationals, which are not competing with sophisticated enough strategies.

National's finance spokesman, Dr Don Brash, said the report should be worrying for a Government that prided itself on supporting growth and innovation.

"Considering the list of legislation ... and measures in the pipeline, such as OSH [occupational safety and health], the Local Government Bill and the Holidays Act, NZ's competitiveness is only likely to fall further."

But Finance Minister Michael Cullen said the drop in rankings was driven primarily by the corporate sector's use of technology, innovation and investment in R&D and by New Zealand's poor savings rates.

"These are all problems which the Government has identified and is working on, but they are not areas which are under the Government's immediate or direct control."

Country (2001 ranking in brackets)



1. US (2)

2. Finland (1)

3. Taiwan (7)

4. Singapore (4)

5. Sweden (9)

6. Switzerland (15)

7. Australia (5)

8. Canada (3)

9. Norway (6)

10. Denmark (14)

11. Britain (12)

12. Iceland (16)

13. Japan (21)

14. Germany (17)

15. Netherlands (8)

16. New Zealand (10)

17. Hong Kong (13)

18. Austria (18)

19. Israel (24)

20. Chile (27)