Slight improvement in SA productivity, competitiveness

Published May 31, 2016

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Kamcilla Pillay

DURBAN: South Africa has recorded a slight improvement in terms of its world competitiveness and productivity, an international ranking study has found.

The 2016 Institute for Management Development (IMD) World Competitiveness Yearbook (WCY) – the leading annual report on the criteria – ranked the country 52nd out of 61 countries. Last year, South Africa ranked 53rd.

The rankings rate the ability of industrialised and emerging economies to create and maintain an environment that sustains the competitiveness of enterprises.

Country data is evaluated through distinct criteria, grouped into four competitiveness factors, namely: government efficiency; business efficiency; economic performance; and infrastructure.

South Africa’s slight improvement, said watchdog group Productivity SA, was despite the continuing challenges faced by the country such as climate change and water scarcity which threaten the sustainability of growth.

Factors like the lack of commitment to skills development, leading to high unemployment rates; increasingly poor public sector service delivery and perceived corruption; education outcomes being poor on average and hugely uneven; low business confidence; and declining household demand, have also negatively impacted on growth.

“Looking at the Brics countries, South Africa has performed better than Brazil which ranked 57th, China also experienced a drop in 2016 rankings to 25th, although it is still the leading country among Brics nations. Russia and India have improved their rankings in 2016, to 44th and 41st places respectively.”

This edition ranks China Hong Kong first, Switzerland second and the US third, with Singapore, Sweden, Denmark, Ireland, the Netherlands, Norway and Canada completing the top 10.

Director of the IMD World Competitiveness Centre Professor Arturo Bris said a consistent commitment to a favourable business environment was central to China Hong Kong’s rise and that Switzerland’s small size and its emphasis on a commitment to quality had allowed it to react quickly to keep its economy on top.

“The US still boasts the best economic performance in the world, but there are many other factors that we take into account when assessing competitiveness,” he said.

“The common pattern among all of the countries in the top 20 is their focus on business-friendly regulation, physical and intangible infrastructure and inclusive institutions.”

The study also found that the rich were getting richer and the poor poorer.

“Since 1995 the world has become increasingly unequal.

The wealth of the richest countries has grown every year except for the past two, while the poorer countries have seen some improvement in living conditions since the millennium.

“The problem for many countries is that wealth accumulation by the rich doesn’t yield any benefits for the poor in the absence of proper social safety nets. Innovation-driven economic growth in poorer countries improves competitiveness, but it also increases inequality.”

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