Korea Ranks 23rd in IMD Global Competitiveness for 2nd Consecutive Year... 'Government Efficiency' Drops 6 Places

[Sejong=Asia Economy Reporter Kim Hyunjung] South Korea's national competitiveness ranking remained unchanged at 23rd place compared to last year. Due to the prolonged COVID-19 pandemic leading to declines in related indicators and worsening conditions perceived by businesspeople, the government efficiency ranking dropped by six places.

According to the Ministry of Economy and Finance on the 17th, South Korea ranked 23rd for the second consecutive year in the national competitiveness ranking announced by the Swiss International Institute for Management Development (IMD), which surveyed 64 countries. In previous surveys, South Korea achieved its highest-ever ranking of 22nd place for three consecutive years from 2011 to 2013, then fell to 26th the following year, dropped further to 29th (2016-2017), and remained at 27th in 2018 and 28th in 2019.

This year, Switzerland, which was 3rd last year, rose to 1st place, while Sweden (6th last year) and Denmark (2nd) took 2nd and 3rd places respectively. The Netherlands maintained 4th place as last year, and Singapore, which was 1st last year, fell to 5th. In the Asia-Pacific region, Hong Kong (7th), Taiwan (8th), and China (16th) ranked higher than South Korea. Japan improved by three places from last year (34th) to 31st.

IMD evaluates national competitiveness by combining statistics and surveys across 20 subcategories in four major areas: economic performance, government efficiency, business efficiency, and infrastructure, covering over 300 detailed items. South Korea's economic performance ranking rose significantly from 27th to 18th due to improvements in employment and domestic economy rankings, and business efficiency also improved slightly from 28th to 27th. However, government efficiency declined by six places from 28th to 34th due to worsening rankings in tax policy, institutional conditions, business environment, and social conditions. Infrastructure remained similar to last year, ranking 17th compared to 16th previously.

Regarding this, the Ministry of Economy and Finance explained, "Economic performance rankings improved as the negative growth rate last year was minimized and investment and export results had a positive effect." They added, "Although the fiscal sector ranking within government efficiency improved, the prolonged crisis inevitably led to worsening indicators and a decline in rankings due to deteriorating conditions perceived by businesspeople." Specifically about the drop in government efficiency, they emphasized, "The tax sector ranking is designed so that rankings decline when tax revenue conditions are favorable, and the prolonged crisis inevitably worsened social condition indicators and affected survey results."

Meanwhile, the government plans to hold the 'Public-Private Joint National Competitiveness Policy Council' on the 18th to analyze the strengths and weaknesses of the Korean economy and discuss related policy directions. Additionally, the government intends to ensure that ongoing policies lead to improvements in national competitiveness by concurrently holding weekly policy review meetings chaired by Lee Eokwon, the 1st Vice Minister of the Ministry of Economy and Finance.