31 May 2012
South Africa rose two places to 50th in the 2012 World Competitiveness Yearbook, an authoritative annual study by Swiss-based business school IMD that measures how well countries manage their economic and human resources to increase their prosperity.
This follows the country’s performance in the World Economic Forum’s Global Competitiveness Index, released in September, in which SA climbed four places to 50th out of 142 countries surveyed – claiming top spot for regulation of exchanges and second place for soundness of banks.
The IMD study, released on Thursday, rates the ability of 59 industrialised and emerging economies based on a survey of more than 4 200 international executives, and is recognised internationally as a leading survey of competitiveness between nations.
Country data are evaluated through 329 criteria grouped into four competitiveness factors: economic performance, government efficiency, business efficiency and infrastructure.
Government, business efficiency improve
According to Business Day, South Africa’s climb was driven by improvements in government efficiency “as well as social factors, such as income distribution and gender income ratios, along with economic factors such as the cost of capital and adaptable central bank policies and foreign currency reserves”.
South Africa moved up from 32nd place last year to 29th place for overall government efficiency, Business Day reports, and from 40 to 37 for overall business efficiency.
IMD executive director Hischam El-Agamy told Business Day that the country’s challenges now were to create jobs, reduce poverty, improve the quality of education and healthcare, and improve public sector efficiency.
“Corruption remains an issue,” El-Agamy added. “University education also needs to be more aligned to business needs.”
While South Africa lags its BRICS counterparts in the IMD’s rankings, it was the biggest improver in 2012: China slipped from 19th to 23rd place, India from 32nd to 35th, and Brazil from 44th to 46th, while Russia climbed one place to 48th.
Infrastructure drive ‘promises further improvement’
Brand South Africa CEO Miller Matola said in response to the survey that he was confident that the country’s climb up the rankings would continue.
South Africa’s massive, state-led infrastructure improvement programme promised “a sustained improvement to our future competitiveness on the all-important infrastructure leg of the assessment,” Matola said in a statement.
However, he cautioned: “We dare not become complacent with our current position, given especially that the competitiveness report is one of the prime factors referenced by foreign investors.
“What we as a nation need to do during the course of the year ahead is to build on the positives and do our level best to reverse the negatives.”
US ‘still at the centre of world competitiveness’
The most competitive of the 59 ranked economies in 2012 are Hong Kong, the US and Switzerland.
“Despite all its setbacks, the US remains at the centre of world competitiveness because of its unique economic power, the dynamism of its enterprises and its capacity for innovation,” Stephane Garelli, director of IMD’s World Competitiveness Center, said in a statement on Thursday.
“US competitiveness has a deep impact on the rest of the world because it is uniquely interacting with every economy, advanced or emerging. No other nation can exercise such a strong ‘pull effect’ on the world,” Garelli said.
“Europe is burdened with austerity and fragmented political leadership and is hardly a credible substitute, while a South-South bloc of emerging markets is still a work in progress. In the end, if the US competes, the world succeeds.”