Australia Not As Competitive As We Think
It's a bit like NAPLAN for global economic competitiveness. The World Economic Forum's Global Competitiveness Report 2017-18 was released this week, and we aren't scoring that well.
Once again, Australia has failed to make the top 20 in the list of the world’s most competitive countries.
Source: Ai Group
But the big message from the heavy-hitting report was clear.
Ten years on from the global financial crisis, the prospects for a sustained economic recovery remain at risk due to a widespread failure on the part of leaders and policy-makers to put in place reforms necessary to underpin competitiveness and bring about much-needed increases in productivity.
When the World Economic Forum speaks, the world listens.
While Switzerland, the United States and Singapore topped the list, Australia is the world’s 21st most competitive economy. Having moved up one place over the past year, Australia has sat outside the top 20 since 2013-14.
The Australian Industry Group (Ai Group) partnered with the WEF in collecting the business data in Australia, and Ai Group Chief Executive, Innes Willox, said, "A big detractor of competitiveness this year was a sharp rise in concerns over policy and political instability.”
* From this list of factors, respondents were asked to select the five most problematic factors for doing business in their country and to rank them corresponds to the responses weighted according to their rankings. Source: Ai Group
“Also detracting from Australia’s performance was a worsening ranking of the adequacy of infrastructure with particular note being made of communications and energy infrastructure.
“These areas combined with the more entrenched areas of restrictive labour regulations, high tax rates and a relatively poor ranking of innovation as the major inhibitors of our competitiveness.”
But it wasn’t a poor result all round for Australia’s competitive performance. We continue to rank in the top 10 global economies for our financial markets (ranking 6th) and our higher education & training systems (9th best).
"While we should celebrate our strengths, the WEF rankings illustrate that our competitiveness performance is well short of our aspirations,” Mr Willox said. “Australians in general are not comfortable sitting this far off the leaders' board.”
According to the Ai Group’s research notes, Australia’s competitive ranking continues to lag behind most of our economic peers, including Canada (14th), New Zealand (13th – ouch!) and Japan (9th).
China, our largest trading partner, ranked 27th amongst the most competitive economies, having also risen one place in the rankings since 2016-17, while the top 10 continues to be dominated by highly advanced economies – the US, Singapore, the UK, Japan, Germany and Hong Kong - as well as enviable northern European economies of Switzerland, The Netherlands, Finland and Sweden.
The Ai Group’s economic indicators research notes that these economies are not the cheapest locations of production globally, but instead share key competitive characteristics such as:
- Very open and competitive trade access and facilities (including large and efficient ports)
- Advanced manufacturing sectors and/or advanced manufacturing design and distribution
- Strong promotion of innovation, ICT, R&D and new technologies
- Very high education participation and quality standards
- Strong and stable financial, legal and political systems
If economic indexes, or indices if your grammatical bent leans towards Latin, are your thing, you can see the full Ai Group economic indicators research notes here, and the WEF Global Competitiveness Report 2017-18 here.