Australia has dropped another place in world competitiveness rankings, falling further in economic performance and government efficiency rankings, raising concerns about our competitiveness as a smart economy.
In releasing the Australian results of the IMD World Competitiveness Yearbook which ranks and assesses 61 countries, CEDA chief executive Professor the Hon. Stephen Martin said Australia’s decline to 18 in the world rankings highlighted a concerning trend over the last five years.
“The overall result is drawn from rankings for four key areas – economic performance, government efficiency, business efficiency and infrastructure, and Australia has slipped significantly in all these areas over the last five years,” he said.
“Our fall in economic performance is particularly concerning, with a drop of four places from last year to 28, which is a drop of 15 places in the last five years.
“Worsening domestic economic conditions, rising unemployment and lower international investment have been the biggest contributors to the drop in the overall economic performance ranking this year.
“International investment includes a ranking on the threat of R&D facilities moving offshore and also services being relocated. Australia has dropped from 39 to 53 and 54 respectively for these areas.
“Our ability to innovate and be a ‘smart’ economy with a highly skilled and innovative workforce has been a comparative advantage for Australia and is becoming even more important as our economy shifts away from mining and resources and looks to services to pick up the slack.
“However, these significant slips in the rankings suggest we may not be keeping pace with global competitors at the very time it is becoming increasingly important for our economy.”
Professor Martin said while Australia only slipped one place compared to last year and five places in five years on infrastructure, what was concerning was the two areas where we slipped the most in this category were in technological infrastructure and scientific infrastructure.
“This again suggests we are losing ground as a smart economy, and we don’t have the infrastructure in place to compete in R&D,” he said.
Professor Martin said while we have only dropped one place compared to last year on business efficiency, Australia has dropped 10 places in five years with productivity and efficiency a key area where we have slipped.
“As the IMD have highlighted this year, this is a key area contributing to how countries rank overall with nine of the top 10 countries ranking in the top 10 for business efficiency,” he said.
“Australia’s government efficiency ranking also dropped five places this year compared to 2014, a drop of seven places in five years. Our ranking in public finance is the biggest contributor to this drop, slipping from 13 last year to 28 this year.
“This is due to the worsening budget deficit as a share of GDP, with our ranking dropping 11 places to 39 and rising real government debt growth, with Australia losing six places dropping to 52.
“Also concerning is that political stability and predictability has now fallen out of the top five key attractiveness indicators for Australia.
“In addition, Australians were more pessimistic about how efficiently public finances are being managed, with the ranking dropping 14 places to 27.”
Overall, Professor Martin said the US retained the number one spot in the rankings followed by Hong Kong, Singapore and Switzerland. The top four have remained the same with Hong Kong and Switzerland swapping places this year.
“Closer to home, for the first time in 18 years, New Zealand has jumped ahead of Australia in the rankings, moving to 17 from 20,” he said.
“In the Asia Pacific region Australia dropped one place, due to New Zealand moving ahead. Japan had the biggest fall in this group, dropping in the overall ranking from 21 to 27.”
Professor Martin said the results for emerging economies are patchy with China improving slightly, Brazil dropping slightly and India remaining in the same place.
The rankings are part of Switzerland based IMD’s 2015 World Competitiveness Yearbook, which compares and ranks 61 countries based on more than 300 business competitiveness criteria. Two-thirds are based on statistical indicators and one third is based on a survey of international executives conducted in March/April of this year.
