Korea's global competitiveness ranking rose by five notches this year according to a report by Swiss-based International Institute for Management Development (IMD). The nation ranked 23rd out of 63 countries this year, compared with 28th place in 2019. Korea's five-step climb in the IMD ranking is its first since 2000. The news is quite positive as it followed a similarly favorable forecast by the OECD that Korea would suffer the least damage among its 37 member nations in growth rate.
Korea Inc. rose in categories such as government efficiency (from 31st to 28th), business efficiency (from 34th to 28th), and infrastructure (from 20th to 16th). However, it was regrettable that the economic performance category remained unchanged at 27th. The report gave high marks for swift digital conversion and high R&D investment by businesses. However, it cited inefficient management of corporate boards, a lack of multinational environmental accords, high tariff barriers and concerns about business relocation as Korea's weaknesses. Businesses should enhance transparency in the decision-making process; while the government should remove regulatory stumbling blocks through better communication with the industrial sector.
According to the Bank of Korea, local companies' profitability fell as turnover contracted, and the debt ratio rose in the first quarter. This is attributable partly to the COVID-19 pandemic that has weighed down on the economy since late February. However, deteriorating corporate performance is not exactly a new problem, as experts have pointed to similar trends since 2018. That bodes ill for the country's future competitiveness. Any drastic changes may only be possible only after the pandemic passes its peak. However, there are things the nation should do now ― reform regulations and develop new growth engines.
A nation can demonstrate its genuine competitiveness in a crisis. The Korean government and people have joined their forces to accomplish “K-quarantine” as a global role model. We hope the spirit displayed in the exemplary fight against the coronavirus pandemic will spread to other sectors of the economy and society to further raise the nation's competitiveness ranking.