Korea lands highest-ever World Competitiveness Ranking

Industry

Published: 18 Jun. 2024, 18:52

Korea lands highest-ever World Competitiveness Ranking

Containers are stacked high at the Sinseondae Terminal of Busan Port. [NEWS1]

Korea achieved its highest-ever placement on the International Institute for Management Development (IMD) World Competitiveness Ranking for 2024. The country ranked 20th out of 67, having ranked 28th in 2023.

Prior to this year, Korea's best performance was its 22nd-place finishes from 2011 to 2013. Its low point is its 41st-place ranking in 1999.

Singapore ranked first, jumping from last year's fourth-place finish, followed by Switzerland, Denmark, Ireland and Hong Kong. Taiwan ranked 8th, and the United States and China placed 12th and 14th, respectively. Japan placed 38th, and Germany fell to 24th from last year's 22nd, finishing below Korea.

The World Competitiveness Yearbook assesses the business environments of companies worldwide, accounting for factors such as economic performance, government efficiency and infrastructure.

Korea ranked 2nd among countries with a population more than 50 million and a per capita income exceeding $30,000, falling behind the United States, as highlighted by the Korea’s Ministry of Economy and Finance's analysis of the IMD's report. The nation ranked seventh out of 30 countries with populations more than 20 million.

Korea's business efficiency, the primary driver behind the improvement in its comprehensive ranking, saw a significant boost, surging from 33rd to 23rd in that category. In infrastructure, which largely bolstered the overall ranking, the country jumped from 16th to 11th.

The country placed 14th in economic performance, having placed 16th in 2023. Government efficiency also saw a slight decline as Korea fell to 39th from 38th.

Within the business efficiency category, subsectors such as productivity and efficiency fell from 33rd from 41st, the labor market to 31st from 39th, finance to 29th from 36th, management practices to 28th from 35th and behavior and values to 11th from 18th.

The overall productivity growth rate fell 15th from 28th, talent attraction to 6th from 14th, corporate agility to 9th from 28th and the population's flexibility and adaptability to 14th from 30th.

Korea's standing also increased in the infrastructure category. Its basic infrastructure moved from 23rd to 14th, technological infrastructure to 16th from 23rd, scientific infrastructure to first from second and education to 19th from 26th, contributed to this rise.

Among detailed indicators, distribution infrastructure efficiency improved from eighth to third, availability of skilled engineers to 29th from 47th and university education from 12th from 22nd.

The economic performance category saw a slight decline. Although the domestic economy rose to seventh from last year's 11th — powered by a growth rate that rose to 34th from 44th and investment that placed 40th from last year's 51st — international trade declined to 47th from 42nd. Within international trade, the overall trade balance improved to 49th from 54th, but the balance of trade in services fell sharply to 62nd from 38th.

Government efficiency also saw a minor fall of one slot. While subindices improved — public finance rose to 38th from 40th, institutional framework to 30th from 33rd, business legislation to 47th from 53rd and societal framework to 29th from 33rd — tax policy declined sharply to 34th from 26th.

Detailed indicators in the government efficiency category showed substantial improvement. Government debt soared to 43rd from 56th, fiscal balance of GDP to 20th from 24th, bureaucratic efficiency to 54th from 60th, accessibility to capital markets to 20th from 27th, fairness of subsidies to 30th from 45th, equal opportunities to 23rd from 40th and the gender unemployment gap to 21st from 37th.

The decline in tax policy was attributed to increased tax burdens, with total tax revenue to GDP sliding to 38th from 32nd, income tax to 41st from 35th and corporate tax to 58th from 48th.

“The government will take this evaluation into account and, in line with the policy direction of 'a dynamic economy driven by the private sector and supported by the government,' will strive to enhance business efficiency, ensure fiscal sustainability, rationalize the tax system, improve government efficiency, reinforce the competitiveness of the service industry and improve trade balances, all to further boost the nation’s overall competitiveness,” a Ministry of Economy and Finance official said.

BY CHO MOON-GYU, CHOI HAE-JIN [choi.haejin@joongang.co.kr]