South Africa gets more competitive

In results released on 18 May 2010, South Africa's economic competitiveness has improved for the second year running. In 2008, it was ranked 53rd and in 2009 it moved to 48th position. This year, the country has moved four notches higher to be ranked at 44th out of a total 58 countries that were selected.

The progress is an indication of the resilient nature of the South African economy despite the impact of the global economic and financial crises last year.

Increased investments

The executive manager of value chain competitiveness at Productivity SA, Sello Mosai, says, "South Africa's strong competitiveness is being linked to the increased level of portfolio investment assets and direct investment stocks moving inward, as investors divert their investments to emerging markets that were not too exposed to the financial crises in a bid to protect their investments.

Mosai further added that the improvement is also due to a better labour market flexibility, improved current account balance, better inflation outlook and cost of living index.

The 2010 edition of the IMD Yearbook rates the ability of 58 industrialised and emerging economies' 'to create and maintain an environment that sustains the competitiveness of enterprises'. Country data was evaluated this year through 327 distinct criteria, grouped into four competitiveness factors: Government efficiency, business efficiency, economic performance, and infrastructure^[1] .

Decline in other aspects

Despite the improvement in South Africa 's economic competitiveness, Productivity SA cautions that South Africa further declined in employment creation, exports and GDP in real terms, although this is a result of the effects of the global recession in the second and third quarter of 2009.

"There was also a reduction in business efficiency from 30th to 31st position. Business efficiency was the only competitiveness factor where South Africa performed poorly as compared to the previous year. It is extremely encouraging to see that South Africa performed well in the other three competitiveness factors," Mosai commented.

"Notably South Africa's performance strengthened in government efficiency where we improved five places from 26th to 21st and in infrastructure, where there was improvement three places from 54th to 51st amongst the 58 countries sampled. This shows that the investment of the government in energy, transportation and infrastructure development through its industrial and economic policies interventions is making progress."

BRIC comparisons

Comparing South Africa's overall competitive ranking with the BRIC countries (i.e. Brazil, Russia, India and China), South Africa performed better than Russia (51st position), but poorer than China (18th), India (31st) and Brazil (38th). Amongst other countries, South Africa performed better than Colombia (45), Mexico (47), Greece (46) and Argentina (55) but performed poorly as compared to Australia (5), Malaysia (10), New Zealand (20) and Chile (28).

Hope for 2011

The chairperson of Productivity SA Board, Alwyn Nel, says South Africa can improve on and even better its competitiveness position next year. Nel cited factors of the current economic conditions where there is improved national and international demand for our products, a stable economic environment, reduced inflationary pressures, promotion of public and private investment to build capacity, imminent competition in key industries, encouraging a stable exchange rate and further developing the skills of our people to expand our asset base.

[1] The rankings are drawn from a combination of hard data and the results of the executive opinion survey conducted by the IMD in partnership with a network of partner institutions. These include leading research institutes and business organisations in the countries covered by the report.