New Zealand has moved up the ranks to become 18th most competitive nation, leaving Australia behind in 21st place.
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New Zealand has climbed five places in this year’s Global Competitiveness Index, rising from 23rd last year to 18th.
Held annually by the World Economic Forum, the Index ranks countries according to their performance on factors such as innovation, market size, market efficiency, infrastructure, business sophistication and others.
It’s the first time New Zealand has overtaken Australia on the index and first time Australia has dropped out of the top 20.
The New Zealand Initiative, who helped compile the data, put the result down to the steady recovery of the New Zealand economy and pro-growth policies. The Initiative’s executive director, Oliver Hartwich, said meanwhile Australia is struggling with deteriorating labour market conditions and their heavy regulatory burden impacted on the final rating.
“The performance is more startling when you consider that just five years ago New Zealanders were staring at ballooning deficits and a deep recession while the Australian government was debt free and riding the tailwind of a mining boom,” Hartwich said.
New Zealand was ranked in the top 10 for higher education, goods and labour market efficiency, health and primary education, quality of its institutions and financial markets development.
The most problematic factors for doing business in New Zealand in 2013 were judged to be inadequate infrastructure, inadequately educated workforce, insufficient capacity to innovate and inefficient government bureaucracy. While the country’s scores for flexibility in hiring and firing practices (61st) and ability to retain talent offshore (79th) dragged down labour market efficiency rankings overall.
BusinessNZ Chief Executive Phil O’Reilly said there is a need for improvement in New Zealand around the areas of innovation, infrastructure, exports and bureaucracy.
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He said that one of the most problematic factors for the country was an inadequately educated workforce.
“Our economy has a critical need for more relevant skills. We urgently need to see more of the right applied skills coming out from our secondary and tertiary education institutions,” he said.
Switzerland was named the most competitive country for the fifth year in a row while Singapore, Finland, Germany and the United States rounded out the top five.