South Africa has moved up the IMD world competitiveness yearbook (WCY) ranking for the second year in a row. A report released yesterday put it at number 44 out of 58 countries, up from 48th place last year and 53rd in 2008.
According to its website, the IMD is an independent not-for-profit foundation located in Lausanne, Switzerland, the Business Report newspaper reported last week. Its annual report on selected countries analyses and ranks their ability to create and maintain an environment that sustains the competitiveness of enterprises. The foundation measures economic performance, government efficiency, business efficiency and infrastructure, and its judgment is based on 327 distinct criteria.
Two-thirds of the weighting is made up of hard data while the rest is based on responses of 4000 executives surveyed. Its latest finding on South Africa showed a big gain in “government efficiency”, improving five places from 26th to 21st place, Business Report adds.
“This shows that the investment of the government in energy, transportation and infrastructure development through its industrial and economic policy interventions is making progress,” said Sello Mosai, the executive manager of value chain competitiveness at Productivity SA.
Productivity SA collates the South African research for the WCY and is the custodian of productivity statistics in the country. Among the recent domestic improvements listed by the WCY were capital flows abroad, the decreasing cost of capital, lower consumer price inflation and reduced risk of political instability. South Africa scored in terms of knowledge transfer, an increase in the number of qualified engineers, the relatively low corporate tax rate, more labour-market flexibility and the improved current account balance, as well as its image abroad.
Mosai said the country had also benefitted as investors moved to emerging markets “that were not too exposed to the financial crisis”. Advanced economies suffered more from the financial crisis of 2007/08 and the global recession that followed than emerging markets, the paper said. However, in some respects South Africa lost ground. Among declines listed were an increase in compulsory contributions to employees’ social security, an increase in the effective personal income tax rate, the rise in the budget deficit and deteriorating gross domestic product (GDP).
The economy experienced three consecutive quarters of contraction, emerging from recession with growth of less than 1 percent in the third quarter of last year and 3.2% in the fourth quarter. The 2010 global ranking was headed by Singapore and Hong Kong – which for the first time in decades topped the US – which came in at third place. The WCY introduced a new concept to its report – a debt stress test based on how long it would take for nations to revert to a “bearable” public debt level of 60% of GDP. Japan fared worst with a forecast date of 2084.