Korea's global competitiveness fell by four notches to 29th among 61 countries surveyed, according to the 2016 World Competitiveness Yearbook prepared by the International Institute for Management Development (IMD). Korea's ranking has continued falling over the last three years, and this year's ranking is the lowest since 31st in 2008 at the height of the global economic crisis. Korea fell behind its Asian rivals ― China (25th), Japan (26th) and even Thailand (28th).
IMD rankings, largely based on opinion surveys of more than 5,400 executives around the world, are compiled on the basis of four principal factors: economic achievements, infrastructure, and government and business efficiency. The rankings have their own limitations, but they have some implications for the economy.
In terms of economic achievements, Korea's scores fell due to its low economic growth rate and weak employment data. In fact, Korea's GDP growth rate is expected to fall from 3.3 percent last year to 2.6 percent this year amid the bleak jobless outlook.
What matters most is that Korea's ranking for business efficiency fell steeply ― from 37th to 48th. Among other things, the ranking for management practices plunged from 53rd to 61st, the bottom, and that for business ethics and top management's social responsibility remained at 58th and 60th, respectively.
These poor ratings may be overblown because the humidifier sterilizer scandal and Korea's restructuring of debt-ridden companies were in the international spotlight after April, when most of the surveys were conducted. But this cannot be an excuse, given the string of incidents that showed Korean business owners' bad behavior, including the nut rage scandal involving a Korean Air scion.
Sadly, business efficiency has deteriorated to such an extent as to undermine our national competitiveness. One cannot help but feel the urgent need to push for the reform of family-run business conglomerates.
IMD advised Korea to carry out structural reforms in the business and labor sectors, map out plans to boost domestic demand and create jobs, especially for young people. All these recommendations are nothing new, but what is most important is to translate them into action. The government, in particular, needs to speed up the restructuring of the shipbuilding, shipping and steel industries beset with chronic oversupply.
To improve inefficient practices in the corporate world, companies should pay their utmost heed to customer satisfaction, business ethics and consumer safety.
IMD rankings, largely based on opinion surveys of more than 5,400 executives around the world, are compiled on the basis of four principal factors: economic achievements, infrastructure, and government and business efficiency. The rankings have their own limitations, but they have some implications for the economy.
In terms of economic achievements, Korea's scores fell due to its low economic growth rate and weak employment data. In fact, Korea's GDP growth rate is expected to fall from 3.3 percent last year to 2.6 percent this year amid the bleak jobless outlook.
What matters most is that Korea's ranking for business efficiency fell steeply ― from 37th to 48th. Among other things, the ranking for management practices plunged from 53rd to 61st, the bottom, and that for business ethics and top management's social responsibility remained at 58th and 60th, respectively.
These poor ratings may be overblown because the humidifier sterilizer scandal and Korea's restructuring of debt-ridden companies were in the international spotlight after April, when most of the surveys were conducted. But this cannot be an excuse, given the string of incidents that showed Korean business owners' bad behavior, including the nut rage scandal involving a Korean Air scion.
Sadly, business efficiency has deteriorated to such an extent as to undermine our national competitiveness. One cannot help but feel the urgent need to push for the reform of family-run business conglomerates.
IMD advised Korea to carry out structural reforms in the business and labor sectors, map out plans to boost domestic demand and create jobs, especially for young people. All these recommendations are nothing new, but what is most important is to translate them into action. The government, in particular, needs to speed up the restructuring of the shipbuilding, shipping and steel industries beset with chronic oversupply.
To improve inefficient practices in the corporate world, companies should pay their utmost heed to customer satisfaction, business ethics and consumer safety.
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