South Korea remains stuck at 26th in WEF’s Global Competitiveness Report

Posted on : 2017-09-28 16:52 KST Modified on : 2017-09-28 16:52 KST
This year marks the fourth in a row that the country has failed to rise in the rankings
The Global Competitiveness Index 2016-2017 rankings from the World Economic Forum
The Global Competitiveness Index 2016-2017 rankings from the World Economic Forum

In the Global Competitiveness Report that is published each year by the World Economic Forum (WEF), South Korea was ranked 26th among 138 countries. This is the fourth year in a row that the country has failed to bounce back after it slid to 26th in 2014, its lowest rank since the report began.

In this year’s assessment of the national competitiveness of 138 countries (and economic regions) – based on factors including macroeconomic health, the efficiency of the financial and labor markets and corporate innovation – South Korea ranked 26th for four years running, the WEF announced on Sept. 28. After peaking at 11th in 2007, South Korea slid to 19th in 2012, 25th in 2013 and then to 26th in 2014, where it has remained for four years in a row.

The WEF assesses the national competitiveness of various countries every year based on statistics received from the International Monetary Fund (IMF) and the World Bank and on a questionnaire of CEOs from various countries. The WEF is a private-sector organization that brings together leading economists, businesspeople and politicians to one place in an ongoing discussion about the prospects of the global economy. This is also known as the Davos Forum, after the name of the place where the forum is held.

The WEF divides its rankings in the index into three sub-indexes. In the “basic requirements” sub-index (which includes such factors as the macroeconomy and infrastructure), South Korea saw a slight rise from 19th last year to 16th this year. This represents an equal increase in transparency in the public sector and in transparency in policy making. The country also rose two places, from 10th last year to 8th this year, in infrastructure, scoring 12th in roads, 7th in railroads and 13th in airports.

But in the “efficiency enhancers” sub-index (which includes labor market efficiency and financial market development), South Korea remained at 26th, the same rank it received last year, and in the “innovation and sophistication factors” sub-index (in which corporate activity is the primary subject being assessed), the country dropped one rank, from 22nd last year to 23rd this year. South Korea remains behind in the areas of labor market efficiency (73rd) and financial market development (74th).

The WEF noted that South Korea was one of the few advanced countries that showed a continuing decline in the rankings over the past decades and that there was a clear imbalance between the 12 sectors. The country’s low efficiency in the labor market was a chronic factor that was crippling the growth of its national competitiveness, and it needed to work on maintaining its advantage in innovative capability vis-à-vis its rivals, the report noted.

The top three countries in the ranking were Switzerland, Singapore, and the US, which was the same as last year, though the US and Singapore changed places. These countries were followed by the Netherlands, Germany, Hong Kong, Sweden, the UK, Japan and Finland. Japan was down one rank from 8th place last year, while Hong Kong rose from 9th last year to 6th this year.

To be sure, many question the credibility of the national competitiveness assessment. The rankings are based on statistics that have been arbitrarily selected by the WEF, a private-sector organization, critics say, contending that they are no more than a mathematical representation of the “pro-business” viewpoints of the CEOs from around the world, whose questionnaire is given more than half the weight in the assessment, critics point out.

“The countries at the top of the rankings scored highly in the areas of labor market and finance market efficiency and corporate innovation. We will keep working to shift to a paradigm of innovative growth and expanded investment in human capital to achieve sustainable growth in our economy,” said a spokesperson for the Ministry of Strategy and Finance.

By Noh Hyun-woong, staff reporter

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