Published on May 20, 2009
Kingdom rises one place for competitiveness
Thailand recently finished 19th in "stress test" rankings, an analysis of which countries are better equipped to weather the economic crisis and improve their competitiveness in the near future, says the "IMD World Competitiveness Yearbook 2009".
The future-oriented test identified economic prospects for this year and the resilience of the government, the business sector and society.
Denmark came in first, because of the strong resilience of its government and business sector and the long-established stability of its society.
Other smaller countries (populations of less than 30 million) from Northern Europe and Southeast Asia also fared well.
"Smaller economies are often more fit to adapt and rebound in difficult times. Another explanation is that several of these nations have already undergone quite severe financial and real-estate crises in the not-so-distant past and may have been more cautious in their policies. Qatar and Chile also display advantages to confront the crisis," the International Institute for Management Develop-ment said in a statement from Lausanne, Switzerland.
The stress test is based on 20 criteria, while the overall "World Competitiveness" ranking is based on 329 criteria, two-thirds of which are hard data and one-third opinion survey.
In the overall "World Competitiveness Yearbook" rankings, among 57 economies Thailand moved up one notch, from 27th last year to 26th this year. The US remained No 1 even though it finished 28th in the stress test, underlining market concerns with the depth of the crisis and the time it will take to resolve it.
Consumer prices, growth in the real gross domestic product, direct-investment inflow, total expenditure on research and development, government subsidies, Thailand's international image, lack of venture capital and electricity costs for industrial clients are among the indicators pulling down the Kingdom's competitiveness.
However, Thailand showed improvements in the number of mobile-phone subscribers, exchange rates, direct-investment outflow, government-policy transparency and fiscal stance.
This year, Thailand must address the challenges of globalisation and the transformation into a "creative-knowledge economy". It also needs to boost investor confidence by developing labour skills, improving the investment climate and reforming its politics, the IMD said.
Regulations to help small and medium-sized enterprises survive the global downturn must be enhanced, while the government must accelerate infrastructure improvement, in order to reduce business costs; for example, improving the logistics system and energy efficiency.
Hong Kong switched places with Singapore to gain second place and is swiftly closing the gap with the US. Switzerland maintains its No-4 ranking from last year.
"In a free-fall economy, competitiveness is also about how countries can resist adversity and show resilience to weather the storm. What is their ability to withstand 'one-off events' such as today's turmoil?
"For example, Japan comes out better than expected in 17th position; likewise Germany (13th) and the UK (21st). However, one must take into account that these rankings are based on a majority of statistics from 2008, especially the growth period of early 2008, and countries entered the economic crisis at different times," said the IMD.
The most spectacular movement was seen by Indonesia, which rose from 51st place to 42nd. Some countries suffered important reversals: Colombia (now in 51st place), Greece (52nd) and Taiwan (23rd) fell 10 places each, followed by Romania (from 45th to 54th). Other important declines included Luxembourg (from fifth to 12th), Hungary (from 38th to 45th), Spain (from 33rd to 39th) and Ireland (from 12th to 19th).
"The IMD's definition of competitiveness is 'how nations and businesses are managing the totality of their competencies to achieve greater prosperity'. Competitiveness is not just about growth or economic performance, but should take into consideration the 'soft factors' of competitiveness, such as the environment, quality of life, technology, knowledge, etc.
"This helps explain why some countries, the US, Japan, the UK, Nordic economies and small, open economies like Hong Kong, Singapore and Switzerland keep their rankings in the top league."