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IMD World Competitiveness Yearbook 2012 results presented at the Bloemfontein 20 November 2012

PRODUCTIVITY MONTH 2012. IMD World Competitiveness Yearbook 2012 results presented at the Bloemfontein 20 November 2012 . Mr Sello Mosai. Outline of Presentation. Introduction Methodology IMD Increasing the prosperity of a nation – 4 factors & 20 sub- factors.

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IMD World Competitiveness Yearbook 2012 results presented at the Bloemfontein 20 November 2012

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  1. PRODUCTIVITY MONTH 2012 IMD World Competitiveness Yearbook 2012 results presented at the Bloemfontein 20 November 2012 Mr Sello Mosai

  2. Outline of Presentation Introduction Methodology IMD Increasing the prosperity of a nation – 4 factors & 20 sub- factors. South Africa in the WCY 2012 World competitive Scoreboard (Overall ranking) Key attractiveness indicators (EOS) South Africa’s performance in 4 competitiveness factors Economic performance, top 5 strengths & weaknesses Government efficiency, top 5 strengths & weaknesses Business efficiency, top 5 strengths & weaknesses Infrastructure, top 5 strengths & weaknesses South Africa’s 5 biggest improvements in the overall performance of the economy. South Africa’s 5 biggest declines in the overall performance of the economy Key Challenges for South Africa

  3. Introduction The World Competitiveness Yearbook (WCY) is an internationally highly regarded and detailed annual publication that compares the competitiveness of 59 countries The IMD Yearbook has been published since 1989. The key objective of the annual WCY is to provide a the most objective assessment of countries’ competitiveness in today’s global world. More specifically, it aims to provide insights of the “Competitiveness Roadmap: 2012–2050” for improved decision making. It measures different facets of a country’s competitive environment: economic & trade, government, business and infrastructure.

  4. Methodology The report is based on statistical data obtained from international and national sources such as World Bank, StatsSA, SARB, etc. and perception (qualitative) data (116 questions) obtained through the Executive Opinion Survey (EOS) completed by business leaders in the private sectors. The EOS is used to complement the statistical data, especially to quantify issues that are not easily measurable (eg. management practises, labour relations, etc.). In determining overall competitiveness of nations – a total of 329 criteria are used in ranking procedures. For the WCY 2012, 2011 statistical data is used and the EOS survey runs from January to end of March 2012.

  5. IMD Increasing the prosperity of a nation – 4 factors & 20 sub-sectors 1. Economic Performance (78 criteria) Macro-economic evaluation of the domestic economy: Domestic economy, international trade & investment, employment 2. Government Efficiency (70 criteria) Extent to which government policies are conducive to competitiveness: Public finance, Fiscal policy, Institutional & Societal Framework, Business Legislation. 3. Business Efficiency (67 criteria) Extent to which the national environment encourages enterprises to perform in an innovative, profitable and responsible manner: Productivity & Efficiency, Labour Mkt, Finance, Management, etc. 4. Infrastructure (114 criteria) Extent to which basic, technological, scientific and human resources meet the needs of business: Basic, Technological & Scientific Infrastructure, Health & Environment and Education.

  6. World Competitiveness Scoreboard (Overall ranking), 2012 SA is ranked 50 out of 59 countries – improved overall ranking – moved up 2 places from 52nd in 2011 to 50th in 2012. Comparator countries, like Brazil (44th to 46th), Argentina 54th to 55th ) & Columbia (46th to 52nd) declinedbetween 2011 and 2012. Top 5 nations include: Hong Kong (1st), USA (2nd), Switzerland (3rd), Singapore (4th) & Sweden (5th) Fig 1. South Africa in WCY, 2012

  7. Key attractive indicators (EOS) Fig 3. Key attractive indicators Source: IMD WYC, 2012

  8. South Africa’s performance in 4 competitiveness factors: Economic performance Source: IMD WCY (2012)

  9. Top 5 Strengths in Economic performance Cost of living index (index of basket of goods of services in major cities, including housing) – ranked 7th (2011: 4th). Terms of trade index (unit value of exports over unit value of imports) –ranked 9th (2011: 1st) – a decline of 8 places. Tourism receipts (international tourism receipts as a %of GDP) – ranked 25th (2011: 26th). Resilience of the economy to economic cycles is weak/strong (survey) – ranked 26th (2011: 18th) – a sharp fall of 8 places. Direct investment stocks abroad ($bn) – ranked 29th (2011: 28th).

  10. Top 5 Weaknesses in Economic performance Unemployment rate (% of labour force) – ranked 59th (2011: 59th). Employment (% of population) – ranked 58th (2011: 58th). Youth unemployment (% of youth labour force, under the age of 25) –ranked 57th (2011: 56th). Direct investment flows abroad ($bn) – ranked 56th (2011: 48th) – a significant drop of 8 places . Direct investment flows abroad (% of GDP) – ranked 55th (2011: 55th).

  11. South Africa’s performance in 4 competitiveness factors: Government efficiency Source: IMD WCY (2012)

  12. Top 5 Strengths in Government efficiency Effective personal income tax rate (% of an income equal to GDP per capita) – ranked 3rd (2011: 3rd). Employer’s social security contribution rate (compulsory contribution as a % of an income equal to GDP per capita) – ranked 4th (2011: 4th). Tax evasion is being adequately addressed (survey)–ranked 5th (2011: 25th) Employees social security contribution rate (compulsory contribution as a % of an income equal to GDP per capita) – ranked 6th (2011: 5th). Government subsidies (to private and public companies as a % of GDP) – ranked 7th (2011: 8th).

  13. Top 5 Weaknesses in Government efficiency Immigration laws prevent you company from employing foreign labour (survey) – ranked 59th (2011: 58th). Gini index (Equal distribution of income scale 0 (absolute equality to 100 (absolute inequality) – ranked 55th (2011: 55th). Government decisions (survey) are not effectively implemented – ranked 55th (2011: 55th).

  14. South Africa’s performance in 4 competitiveness factors: Business efficiency Source: IMD WCY (2012)

  15. To 5 Strengths in Business efficiency Stock market capitalisation (as a % of GDP) – ranked 2nd (2011: 2nd). Stock market index (% change on index in national currency) – ranked 4th (2011: 24th) – Improved by 20 places. Financial risk factor (the risk factor in the financial system – new financial instruments, non-performance loans, transparency – are adequately addressed) –ranked 6th (2011: 16th) – Improved by 10 places Shareholders’ rights are sufficiently implemented (survey) ranked 6th (2011: 10th) – Improved by 4 places. Stock markets provide adequate financing to stock markets (survey) – ranked 7th (2011: 13th)– Improved by 6 places.

  16. To 5 Weaknesses in Business efficiency Skilled labour is readily available (survey) – ranked 59th (2011: 59th). Labour force (as a % of population) – ranked 58th (2011: 58th). Labour relations are generally productive (survey) –ranked 58th (2011: 58th). Worker motivation in companies is high (survey) – ranked 57th (2011: 56th).

  17. South Africa’s performance in 4 competitiveness factors: Infrastructure Source: IMD WCY (2012)

  18. To 5 Strengths in Infrastructure Total public expenditure on education (% of GDP) – ranked 12th (2011: 17th). Increased by 5 places. Intellectual property rights are adequately enforced (survey) – ranked 24th (2011: 26th) Total health expenditure (% of GDP) –ranked 24th (2011: 25th). Climate change is being effectively addressed by your government (survey) – ranked 24th (2011: 39th) – moved up by 15 places. Scientific research legislation (Laws relating to scientific research do encourage innovation) (survey)– ranked 26th (2011: 28th).

  19. Top 5 Weaknesses in Infrastructure Life expectancy at birth (average estimate) – ranked 59th (2011: 59th). Internet bandwidth speed (per internet user, kbps) – ranked 59th (2011: 56th). Declined by 4 places. Health problems (sicknesses, AIDS, alcohol, drug abuse, etc.) do have a significant impact on companies (survey) –ranked 59th (2011: 59th). Communications technology (voice and data) meets business requirements (survey) – ranked 59th(2011: 59th). Qualified engineers are available in your labour market (survey) – ranked 58th (2011: 58th).

  20. SA’s 5 biggest improvements in the overall performance of the economy Largest (+) % change in the value of each criterion from 2011 to 2012: Direct investment flows inward ($bn) & (%), % change from 1.22% & 0.34% to 5.72% ( 4.5%) & 1.40% ( 1.06%) in 2011 & 2012, respectively. Tax evasion (survey), % change from 4.26% in 2011 to 7.46% in 2012 ( 3.2%). Future energy supply (survey), % change from 2.58% in 2011 to 3.54% in 2012 ( 1.0%) Health problems (survey), % change from 1.62% to 2.13% in 2011 and 2012 ( 0.5%) Real GDP growth per capita, % change from 1.47% to 1.9% in 2011 and 2012 ( 0.4%).

  21. SA’s 5 biggest declines in the overall performance of the economy Largest (-) % change in the value of each criterion from 2011 to 2012: Direct investment flows abroad ($bn) & (%), % change from -0.16% & -0.50% to -0.04% ( 0.04%) & -0.12% ( 0.38%) in 2011 & 2012, respectively. Public finances (survey), % change from 5.13% in 2011 to 3.67% in 2012 ( 1.5%). Management of cities (survey), % change from 5.65% in 2011 to 4.21% in 2012 ( 1.4%). Bribing and corruption (survey), % change from 1.71% in 2011 to 1.29 in 2012 ( 0.4%) Relocation threats of R&D facilities (survey) (Relocation of R&D facilities is a threat to your economy), % change from 4.87 in 2011 to 3.79 in 2012 ( 1.1%).

  22. Key Challenges for South Africa • Focus on employment growth, poverty reduction, education quality and improving health outcomes • Effectively utilise our comparative advantage by growing and strengthening resource and labour-intensive industries • Develop an effective and efficient public sector to improve service delivery. • Attract investment to support R&D activities and world-class technologies. • Support and boost entrepreneurship and small business development.

  23. Q & A session THANK YOU

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