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2016 World Competitiveness Report: New Zealand lifts rank, US topples as most competitive economy

2016 World Competitiveness Report: New Zealand lifts rank, US topples as most competitive economy

Call raised for long term solution to increasing inequality in income among nations

'Current economic growth is by no means a guarantee of future competitiveness'
'Current economic growth is by no means a guarantee of future competitiveness'

New Zealand is number 16 in the annual list by the IMD World Competitiveness Center, one rank higher than in 2015.

Australia is number 17 in the list, up from 18 last year.

China Hong Kong and Switzerland got the top two ranking, toppling the United States as the world’s most competitive economy.

Professor Arturo Bris, director of the IMD World Competitiveness Center, says a consistent commitment to a favourable business environment was central to China Hong Kong’s rise and that Switzerland’s small size and its emphasis on a commitment to quality have allowed it to react quickly to keep its economy on top.

“The USA still boasts the best economic performance in the world, but there are many other factors that we take into account when assessing competitiveness,” he says in a statement.

Innovation-driven economic growth in poorer countries improves competitiveness, but it also increases inequality. This is obviously an issue that demands long-term attention

Professor Arturo Bris, IMD World Competitiveness Center

“The common pattern among all of the countries in the top 20 is their focus on business-friendly regulation, physical and intangible infrastructure and inclusive institutions.”

Responses from an in-depth survey of more than 5,400 business executives, who are asked to assess the situation in their own countries, were also considered in the ranking.

“One important fact that the ranking makes clear year after year is that current economic growth is by no means a guarantee of future competitiveness,” says Bris.

“Nations as different as China Mainland and Qatar fare very well in terms of economic performance, but they remain weak in other pillars such as government efficiency and infrastructure.”

Data gathered since the first ranking was published more than 25 years ago also lend weight to fears that the rich are getting richer and the poor poorer, says Bris.

“Since 1995 the world has become increasingly unequal in terms of income differences among countries, although the rate of increase is now slowing,” he states.

“The wealth of the richest countries has grown every year except for the past two, while the poorer countries have seen some improvement in living conditions since the millennium.

“Unfortunately, the problem for many countries is that wealth accumulation by the rich doesn’t yield any benefits for the poor in the absence of proper social safety nets.

“Innovation-driven economic growth in poorer countries improves competitiveness, but it also increases inequality. This is obviously an issue that demands long-term attention.”

Read more: Budget 2016: The data behind the science and innovation investments

The ranking has been produced every year since 1989 by the IMD World Competitiveness Center and is widely acknowledged as the leading annual assessment of the competitiveness of countries.

In 2015 the top 10 consisted of the USA, China Hong Kong, Singapore, Switzerland, Canada, Luxembourg, Norway, Denmark, Sweden and Germany.

Send news tips and comments to divina_paredes@idg.co.nz

Follow Divina Paredes on Twitter: @divinap

Read more: Thinkubator: Inside an innovation centre

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Tags dataglobalisationinnovationcompetitive advantageIMD World Competitiveness Centereconomic performance

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