[EDITORIALS]How have we fallen so far?Korea’s status for this year in the Global Competitiveness Rankings, published by the Swiss-based International Institute for Management Development (IMD), fell by nine notches from a year earlier, to rank 38th in the world. It was the steepest slide of any of the 61 countries in the survey, meaning Korea’s national competitiveness has eroded more than has any other country’s. Korea’s self-image of having cemented its economic strength was shattered by an objective assessment by the international community.
How did we put ourselves into such a dire position? The cause for our stumble is apparent if we take a closer look at the details of the survey. Among the survey’s four categories, Korea fell by 16 notches in “effectiveness of the government,” and by 15 notches in “corporate competitiveness.” This shows that the ineffectiveness of the government and domestic companies are eroding the nation’s overall competitiveness.
In the governmental administrative category, Korea’s ranking dropped from 34th to 51st due to burdensome regulations on local companies. The ranking for regulatory environment for corporate activities also fell from 30th to 46th.
Unlike the slogan “a corporate-friendly nation” that the Korean government has been putting forth for years, it turns out the government has been making things worse for companies operating here. We cannot possibly figure out what the government has been trying to do all those years while it boasted of a so-called “innovation in government,” but actually interfered in the corporate activities of local companies.
The survey also showed the nation’s labor-management relations, which at 61st was ranked the worst in the survey, and ineffective management of small and medium-sized companies also played a significant role in eroding the nation’s overall corporate management. The opaque corporate governance of major conglomerates was also blamed for the slide. Domestic companies therefore must keep in mind that they could be blamed for worsening the nation’s competitiveness if they keep using outdated business methods.
China and India, however, both of which outpaced Korea by jumping to the 19th and 29th rankings, respectively, saw the effectiveness of their governments and companies improve significantly. We should keep in mind that all the top-ranked nations in the survey had highly-effective corporate management and governmental administrations.
One government official said the reason for Korea’s fall in the survey this year was because the “objective assessment was positive, but the survey results on local companies were bleak.”
But national competitiveness, as defined by the institute, is a nation’s ability to create an environment that helps companies be more competitive. It means that companies’ negative assessment of themselves and of their country could push the competitiveness ranking down.
The government should stop pointing their fingers somewhere else when the results of these kinds of assessments are bad, and boasting about its accomplishments when they are positive. It needs to think about its own problems and focus on coming up with solutions.