Australia has recorded a slight increase in its global competitiveness thanks to short-term economic factors, but this is masking longer-term issues around lagging productivity, low rates of entrepreneurship and poor technology adoption, according to a new report.
The International Institute for Management Development’s World Competitiveness Yearbook, released on Wednesday by CEDA in Australia, ranked Australia at 19 out of the 63 countries analyzed, an improvement of three spots on last year.
But Australia continued to perform poorly on its well-established areas of weaknesses, placing at 61st on entrepreneurship, 52nd in science graduates, 47th in communications technologies, 49th in international experience and 45th in medium and high-tech value-added.
The short-term boost is thanks to strong trade and economic recovery from the pandemic, but Australia will soon drop back down if it does not lift its game on longer term factors, CEDA CEO Melinda Cilento said.
“Australia’s terms of trade driven by strong commodity prices, employment numbers and pandemic recovery have saved the day – ensuring our international competitiveness ranking improved and did not slip further,” Ms Cilento said.
“However, it is clear when compared against the top performing countries, that long-term and well known weaknesses in the policy environment are holding Australia back. Australia’s future competitiveness is not assured without lifting our game in areas such as technology, energy, skills and training, entrepreneurship, tax and productivity. ”
The report ranks the 63 countries across 333 competitiveness criteria, along with a survey of an average of 100 executives per economy. This data is then fed into four factors: economic performance, government efficiency, business efficiency and infrastructure.
Australia performed strongest in economic performance and government efficiency, coming in at 16th for both. It was placed at 26th for business efficiency and 19th in terms of infrastructure.
The top five ranking countries according to the report were Denmark, Switzerland, Singapore, Sweden and Hong Kong. At 19th, Australia placed behind the likes of Iceland, China and Qatar.
Australia saw a sharp drop in its ranking in workplace productivity, falling from 20th last year to 41st.
Several of the indicators Australia performed poorly in represent key long-term growth factors, Ms Cilento said.
“On the fact of it, Australia’s short-term outlook is good but the IMD highlights that the critical pillars of competitiveness in a turbulent global environment are the institutional framework, infrastructure and education – areas where Australia must now make very deliberate policy choices to underwrite future success, ”she said.
“Australian companies are far less digitally advanced than their global competitors and information technology continues to be a much smaller contributor to our economy than other advanced economies.”
According to the report, Australia ranks at 44th out of the 63 countries for government subsidies, 41st for workforce productivity, 47th in renewable energies, 45th in internet bandwidth speed and 45th in terms of ICT service exports.
Last year saw Australia slide to its lowest ranking in the last 25 years in the same report.
The report also shows that Australia needs to diversify its exports, Ms Cilento said.
The rankings also suggest that Australia’s export concentration remains an area of vulnerability. Australia must lift its game on trade – diversifying its trading partners and continuing to build new markets for the goods and services in which we compete, ”she said.
Do you know more? Contact James Riley via Email.