Australia ranks as the ninth most competitive of the world's 60 major economies in the 2005 World Competitiveness Yearbook, released in Australia by CEDA today.
Australia fell from last year's record fourth place and 2003's seventh. Its overall "competitiveness score" fell from 86.0 to 82.0.
The fall in the ranking reflects deteriorations in a number of Australia's rankings, including actual and expected economic performance, inflation, government finances (including the federal budget surplus) and education, health and environmental indicators.
The Yearbook is produced by Switzerland's IMD, one of the world's top business schools, with the help of CEDA and other international partners. Its rankings and detailed country-by-country data are used by businesses and governments around the world. Australian governments have heavily advertised results such as last year's, in marketing campaigns designed to attract business investment to Australia. [Details of the Yearbook methodology are in the attached PDF document.]
"This year's numbers underline the potential to keep improving the nation's economy," says CEDA chief executive officer David Edwards.
"CEDA has been calling for a new wave of economic reform. This Yearbook ranking confirms there's plenty of scope to do better than we're doing now."
Improvements to Australia's education system top CEDA's list of five key challenges for the Australian economy, included in the Yearbook. CEDA believes Australia also needs to address its system of business innovation, facilitate further infrastructure investment and continue to respond to the challenge of an ageing population. [The full list of challenges is in the attached PDF document.]
"Despite this year's drop, Australia remains a highly competitive economy and a strong society.
"Businesses in this country say they're operating in a fair environment. And they generally rate both federal and state governments highly.
"Australians like to complain about government, but many of the figures we're releasing today suggest we're better-governed than most. By world standards, political parties understand the challenges, and government gives consistent policy direction and implements decisions transparently and well. Australia also does particularly well on human development indicators: we are highly literate and well-educated at a basic level, and we have a high life expectancy. And we have a stable and cohesive society by world standards.
"That's an encouraging picture of the country.
"And though Australians tend to talk down our management abilities, we also continue to rank strongly on indicators of good management practice.
"It's particularly pleasing that managers rate the economy as resilient in the face of the economic cycle. That suggests that the boom-bust mentality that has long plagued Australia may be fading."
"Two areas of concern stand out clearly in these rankings," David Edwards says.
"We remain relatively cut off from global trade: even after accounting for our geographic isolation, we simply do not buy and sell enough with the rest of the world. In international trade we rank 55th out of 60 nations.
"And in a number of education- and technology-related activities, we lag behind. Employers find skilled labour harder and harder to hire. We rank relatively low both on secondary school enrolment levels and on the proportion of the population with tertiary education. We're a poor high-technology exporter, we spend relatively little on research and development, and we lag on several indicators of telecommunications."
"Our education system needs a lot more attention."
The World Competitiveness Yearbook rankings also confirm that lower taxes and government spending do not automatically make an economy more competitive. The top 15 countries included five (Finland, Denmark, Luxembourg, Sweden and Norway) with taxes above 40 per cent of GDP.
"Tax is no substitute for competitiveness," says the IMD's Professor Stéphane Garelli. "The real 'engines' of competitiveness are science, technology, entrepreneurship, finance, logistics and education." [Further comments by Professor Garelli appear in the IMD press release and executive summary available at the link below.]
The attached PDF document contains details of the Yearbook methodology, CEDA's five challenges for the Australian economy, and a list of "Eight things you might not know about Australia’s place in the world", based on data in the Yearbook.
Australian media can download more detail of the rankings and methodolgy, plus comments from the IMD's Professor Stéphane Garelli, by going to the IMD World Competitiveness Centre's media download page at:
www.worldcompetitiveness.com/wcc
Enter the following password:
media05
For further information please contact:
John Harris
Corporate Relations Director
Phone 03 9652 8415
Email info@ceda.com.au
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