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South Korea’s recent IMD rankings of economic competitiveness

South Korea’s national competitiveness fell from 25th to 29th in one year, pushing the country below not only Japan but also China.

The South Korean government contends that companies‘ weak sense of ethics and the lack of transparency in management are the key factors that are eroding competitiveness.

According to the IMD World Competitiveness Yearbook 2016, which was released on May 30 by the International Institute for Management Development (IMD) in Switzerland, South Korea ranked 29th among 61 countries.

Though doubts are frequently raised about the reliability of the IMD yearbook, which is largely based on a questionnaire that depends upon respondents’ subjective assessments, it is still used alongside the World Bank’s Doing Business Report as a reference index for countries’ overall competitiveness.

After holding to 22nd place from 2011 to 2013, South Korea slipped to 26th in 2014 before rising one place last year.

The area that prompted this year’s drop in ranking was corporate efficiency, with South Korea plummeting from 37th last year to 48th this year. In other categories - including government efficiency (28th to 26th), economic performance (15th to 21st) and infrastructure (21st to 22nd) - the country’s ranking either improved or edged down slightly.

“The decline in ranking resulted from a fall in the area of corporate efficiency,” South Korea’s Ministry of Strategy and Finance said. Indeed, the country’s score in the subcategories of corporate efficiency, including corporate attitude and values and corporate practices, was much worse than the previous year.

There were particularly steep drops in the implementation of corporate ethics (from 39th to 58th) and in importance placed on customer satisfaction (14th to 46th). Other areas of sharp decline were corporate social responsibility (50th to 60th) and companies’ interest in health and safety (44th to 56th).

“The corporate efficiency score is based on the survey to a considerable extent. The drop in the corporate efficiency score was exacerbated by the humidifier disinfectant scandal and other corporate ethics issues that were raised while people were responding to the survey (Feb. 1 to May 4),” said Min Hee-kyung, an official in the Ministry’s economic policy bureau.

Hong Kong and Switzerland rose to 1st and 2nd place in the ranking. The US fell from its 1st place ranking last year to 3rd, while 4th and 5th place were occupied by Singapore and Sweden, respectively. China and Japan rose to 25th and 26th place.

By Kim Kyung-rok, staff reporter

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