By Cho Jin-seo
Staff reporter
Korea was rated 23rd in terms of the global business environment this year, up four notches from last year and the highest so far in the IMD World Competitiveness rankings of 58 large economies.
In a report released Wednesday, Korea earned big points from its relative unscathed escape from the global financial crisis, and improvements made in the efficiency of the public sector, the Ministry of Strategy and Finance said.
"Korea scored well in the unemployment and GDP growth rates, but didn't do well in foreign direct investment and foreign portfolio investment," the ministry said in a press release.
Korea had hovered around the 30th place since the inception of the IMD report in 1997. It tumbled to 41st in 1999 right after the Asian financial crisis. It was placed 29th in 2007, 31st in 2008 and 27th in 2009.
This year's positive review from the Swiss institution on Korea's business environment was good news for President Lee Myung-bak and his administration ahead of the critical June 2 local elections.
The IMD annual report ranks and analyzes the ability of nations to create and maintain a competitive business environment. This year's result reflects the emergence of Asian countries in general, while European countries, especially in the Eastern bloc, saw their rankings plummet from last year's.
The Southeast Asian trade hubs of Singapore and Hong Kong topped the rankings, pulling down the previously top placed United States to third. The surprising winners were Taiwan and Malaysia, which leaped 15 and eight notches, respectively, to place eighth and 10th respectively.
Japan was a rare Asian loser this year, as it slipped four rungs to 27th. Thailand was stationary at 26th place, with the current political turmoil apparently not taken into account in its rankings.
The index evaluates a country's competitiveness at the enterprise level, so it does not necessarily reflect the welfare of laborers or citizens, nor political or cultural influences. For example, Korea's index is positively influenced by the fact that people have the world's second longest working hours, which is apparently not making them any happier.
At the same time, it was negatively influenced by the increase of labor costs in the manufacturing industry (from third to 18th), which means workers here are benefiting from a higher income than last year.
Regardless of such controversies, the index clearly showed some of Korea's weaknesses and strengths. The nation excelled in R&D patents and in the proportion of people going on to higher education. But it earned very low marks in softer criteria, such as cultural openness (52nd).
As for the challenges ahead for the rest of this year, the IMD suggested that the Korean government should endeavor to create more and better jobs, reform education by nurturing creativity, improve public schools, bridge income gaps and successfully host the G-20 summit.