According to the World Competitiveness Yearbook 2010 released by the Switzerland-based business school IMD Wednesday, Korea ranked 23rd, the highest in the countrys history. After rising from 31st in 2008 to 27th last year, Koreas global competitiveness jumped four notches this year. In another first, the country also beat Japan, which slipped 10 notches from 17th last year to 27th this year. Needless to say, the results are cause for neither joy nor sadness. The latest rankings, however, show that the worlds economic landscape has undergone significant changes after the global financial crisis.
Of four categories, Koreas performance improved significantly in economic performance and government efficiency, and this raised the overall ranking. Economic performance jumped from 45th to 21st and government efficiency from 36th to 26th in a year. IMD positively rated Koreas rapid economic recovery thanks to swift and preemptive policies. Other factors were the countrys current account surplus, and rise in foreign exchange reserves. Koreas ranking in corporate efficiency rose two notches from 29th to 27th but its infrastructure ranking remained at 20th.
In certain criteria, however, the countrys rankings remained poor. Of the 58 surveyed nations, Korea stayed at 56th in productivity of labor-management relations due to unhealthy relations between labor and management. The foreign direct investment-to-GDP ratio ranking slipped two notches from 52nd last year to 54th this year. Korea ranked 52nd in the efficiency of smaller companies and cultural openness and 51st in directors supervision of management. In how education reflects social and economic demands of society, Koreas ranking rose from 51st last year to 46th this year. Despite the slight improvement, the country still lags behind others in educational efficiency.
Japans significant fall in the rankings means a lot to Korea. Though it once boasted the worlds strongest competitiveness, the Land of the Rising Sun has dropped 10 places in the IMD poll mainly due to its surging fiscal deficit and struggling major companies such as Toyota Motor, Sony, and Japan Airlines. This is an important lesson that neither a nation nor a company can stay No. 1 forever.
Unlike Japan, many Asian nations have raised their competitiveness. Singapore ranked first in the IMD study, beating the U.S. Taiwans ranking jumped from 23rd last year to eighth this year. That of China also rose two notches from 20th to 18th.
IMD advised Korea to create decent jobs, reform its education system to improve creativity, introduce efficient exit strategies given the possibility of a double-dip recession and inflationary pressure, narrow gaps in income and regions, and successfully host the Group of 20 summit. The Korean government, public and private sector should closely cooperate to bolster the countrys strengths and resolve its weak points to boost national competitiveness further.