Tuesday 22 June 2010

Can Australia really be 5th in world competitiveness?

It's surprising we haven't heard more about it really, the fact that Australia now ranks 5th in overall performance in the prestigious IMD World Competitiveness Yearbook 2010 .  I would have expected a few Ministerial press releases at least. It is a record after all.  While Australia  has improved its ranking from 12th in 2007 to 7th over the next two years, and to 5th today,  Singapore (1) and Hong Kong (2) pushed the US to third place for the first time. But, according to IMD, these three countries are so close they can be defined as the leading "trio". Switzerland retained 4th place, by the way.

But before I join you in puffing up our collective chests, I recall a sensitivity analysis performed a few years ago by Treasury and the Productivity Commission, in which they showed a country's performance can rapidly move up and down the ranks depending on even minor changes to scores or the relative weightings of the various components. This is perhaps best illustrated by our ranking in the competing Global Competitiveness Report issued by the World Economic Forum, in which we only placed a lowly 15th in 2009-2010.

But let’s not decry the fact that we did well in the IMD survey, which has longevity and consistency. In fact, both surveys include rankings for institutions, infrastructure, our economic performance, governance, and business and technological sophistication, and in the absence of anything else, provide a useful indicator as to how well we’re doing. In both of them, the world loves our economy, our legislative and societal framework, and human capital.

No guessing either where we need to improve: international trade, labour market efficiency, and particularly infrastructure. In Australia , our media has conditioned us to think of ports, roads, and rail as “infrastructure”. It’s telling that in both of these surveys, that term is much broader, and includes our technological and scientific infrastructure as well – for example, telecommunications, IT, universities, and overall “innovation”. In world competitiveness, IMD rates Australia just 25^th in technological, 19^th in basic, and 16^th in scientific infrastructure.

That’s not something that can be changed overnight – it requires policies that are focussed on building our capacity to innovate for the long haul. With hints of innovation fatigue creeping in, particularly in Treasury, we need to stick with it.

This is an entry from Dr Rowan Gilmore's blog which can be found on the Fast Thinking website. Rowan is CEO of the Australian Institute for Commercialisation.

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