Korea Ranked 26th in Global Competitiveness

Korea ranked 26th out of 104 nations in global competitiveness, and it is analyzed that chances are high for Korea to experience a rush of businesses moving overseas if it does not improve its business environment.

The Geneva-based World Economic Forum (WEF) released the Global Competitiveness Report 2004 on Thursday. Korea stood at 26th, which is lower than its Asian competitors such as Singapore (7th), Hong Kong (8th), and Taiwan (11th).

Accordingly, it is all the more urgent for Korea to strengthen its global competitiveness in order to achieve sustainable growth.

In October, the WEF announced that Korea fell from 18th to 29th in Growth Competitive Index (GCI), and ranked 24th in Business Competitiveness Index (BCI), down one notch from last year.

The WEF released the Global Competitiveness Index for the first time this year, which complements GCI and BCI.

In detail, Korea received high scores in macroeconomic soundness (4th) and technology (12th), but performed badly in labor market efficiency (85th) and financial market efficiency (67th).

Hong Kong and Singapore ranked first and second respectively in the labor market efficiency. In terms of the financial market efficiency, Britain and Hong Kong came first and second respectively.

The U.S. topped the list in overall competitiveness rankings. Finland, which ranked first in GCI, came second in Global Competitiveness Index, followed by Denmark, Switzerland, Sweden, and Germany.

Meanwhile, Professor Michael Porter of the Harvard Business School, who is an expert in competitiveness, categorized Korea as one of the countries that face a high risk of businesses moving overseas. He argued that it is very urgent for such countries to improve their business environments.

“Company Operations and Strategy Ranking was much higher than the Quality of the National Business Environment Ranking in countries such as Korea, Japan, Germany, Italy, France, and the Netherlands, so companies in those countries are highly likely to move overseas, which provides better business environments,” said the professor.

Korea ranked 21st in Company Operations and Strategy, while standing at 28th in Quality of the National Business Environment, which is quite a big gap.

The Global Competitiveness index evaluates 12 areas, such as labor market efficiency, institutions, macroeconomic soundness, and human resources, to show how efficiently businesses can operate in a nation.

Jong sik Kong Chi-Young Shin kong@donga.com higgledy@donga.com