The Laussane, Switzerland-based International Institute of Management
Development (IMD) has given a thumbs-up to China and India for
their growing competitiveness. In IMD's World Competitiveness Yearbook
rankings 2006 released on Wednesday, China and India have leapt up the rankings,
China from 31 to 19 and India from 39 to 29.
China (19th) demonstrated
its sharp economic growth by continuing its surge up the league table,
leapfrogging 12 places since last year to reach the top 20.
"It is a
quite remarkable fact that the largest nation in the world may soon become
the first creditor of the largest capitalist nation in the world," Garelli
pointed out.
China's forex reserves amounted to US$853.6 billion at the
end of February, exceeding Japan for the first time to become the biggest forex
reserves in the world.
However, China is one of 29 economies in the survey of 61 nations or regions
where government is rated as having negative impact on competitiveness.
The US is still the world's most competitive economy but others are closing
the gap, aided by better government performance and efficiency, according to the
IMD report.
Hong Kong and Singapore come second and third respectively in the IMD's 2006
league table of 61 national and regional economies, followed by Iceland and
Denmark. The UK (21) is the top-rated large European Union country, with Germany
at 26, France at 35 and Italy near the bottom at 56.
"Hong Kong and Singapore are catching up with the US because their
governments are more in synchronisation with economic performance," says
Stephane Garelli, who directs the competitiveness programme at Lausanne-based
IMD. He points to the contrast between strong US economic growth and the huge US
budget deficit and foreign debt.
The IMD's annual ranking this year compares the scores of each country on
economic performance with the efficiency of their government, defined to include
such areas as budget deficits and red tape. The main government underachievers
are Venezuela, Argentina, Brazil, Mexico, Poland and Italy - the only economy to
record no growth last year. But the economy also substantially outperforms
government in the US and France.
Prof Garelli argues: "A growing gap between governments and economic
performance is always a bad omen for the future." He notes that the governments
of China and India are also lagging behind as they struggle to keep pace with
the consequences of explosive economic growth.
"Failure to do so may create economic and social imbalances that could
jeopardize what has been achieved so far," he said.
Governments making a positive contribution to competitiveness, with
government ratings higher than economic ones, include Finland, Denmark and
Jordan.
While the top-ranked economies this year are broadly the same as last,
further down the league table changes are more dramatic. China and India have
leapt up the rankings, China from 31 to 19 and India from 39 to 29. Economies
losing ground are Taiwan (18 from 11) and South Korea (38 from 29).
Competitiveness rankings are sensitive to indicators chosen and weights given
them. But they tend to be heavily influenced by current performance, one reason
why the league table by the Geneva-based World Economic Forum does not usually
diverge significantly from IMD's.
The IMD scorecard uses 312 criteria grouped in four categories - economic
performance, government efficiency, business efficiency and infrastructure -
based on statistical data and an executive opinion survey.
The top 20
competitive economies:
1: United States
2: Hong Kong
3: Singapore
4: Iceland
5: Denmark (up 2 places)
6: Australia (up 3)
7: Canada (up 2)
8: Switzerland
9: Luxembourg (up 1)
10: Finland (down 4)
11: Ireland (up 1)
12: Norway (up 3)
13: Austria (up 4)
14: Sweden
15: Netherlands (down 2)
16: Bavaria (up 2)
17: Japan (up 4)
18: Taiwan (down 7)
19: China (up 12)
20: Estonia (up 6)
