ED Falling competitiveness
Seoul should carefully examine why, take remedial steps
Korea's national competitiveness ranking dropped by one notch, from 27th place to 28th among 63 countries, this year. The Switzerland-based International Institute for Management Development (IMD) evaluated four factors ― economic achievements, infrastructure, government and corporate efficiency ― and Korea fared especially poorly in economic accomplishment and government efficiency.
The nation placed 10th among 16 Asian countries in overall competitiveness. Its ranking was even lower than those of Malaysia (22nd) and Thailand (25th), not to speak of Singapore (1st), Hong Kong (2nd), China (14th) and Taiwan (16th) on the total rankings list. Korea's economic achievements plunged seven notches, from 20th place in 2018 to 27th this year. The Moon Jae-in administration has emphasized that the national economy is sound and steady, but the IMD report confirmed the economy is in trouble mainly because of sluggish domestic consumption and weak job creation.
Government efficiency also fell from 29th to 31st. More specifically, fiscal operation went from 23rd to 27th, and business regulations slid from 47th to 50th. Labor market openness was near the bottom in 61st place. College education's suitability for social demand was little better, at 55th place. The fall in government efficiency should have come as pain for the Moon administration.
A silver lining in the dark competitiveness cloud was the relative advance in business efficiency. Corporate efficiency rose from 43rd to 34th place, and its entrepreneurship jumped from 55th to 45th place. Although Korean society is filled with anti-business sentiment and business bashing, it was business enterprises that kept the national competitiveness from falling further.
The IMD report has many implications. What does it mean that the nation's economic achievement and government efficiency have dropped, although the Moon administration is actively pushing to raise the minimum wage, reduce working hours, expand public welfare and increase the number of government employees? Policymakers should realize the report is a warning that calls for them to accept the fall in global competitiveness with deep self-reflection. Now is the time for President Moon and his economic team to consider seriously whether to push ahead with their current economic policy or change it in ways to reinvigorate the economy and enhance government efficiency.