IMD’s World Competitiveness Yearbook
The World Competitiveness Yearbook, published yearly by the Institute for Management Development (IMD) since 1989, henceforth referred to as the IMD survey, also focuses on the economic competitiveness of nations but, similar to the WEF survey, it also includes many questions dealing with regulation.
The IMD survey samples 61 economies of which 8 are regions and the rest are countries.[7] The overall indicator is made up of 312 criteria that are grouped into 4 competitiveness factors, which are then averaged to obtain the overall World Competitiveness Scoreboard. The four factors are: ‘Economic Performance’ (which includes 77 criteria), ‘Government Efficiency’ (73 criteria), ‘Business Efficiency’ (69 criteria), and ‘Infrastructure’ (95 criteria). New Zealand fell from an overall position of 16th in 2005 to 22nd in 2006. Most of this fall is explained by weaker economic performance.
The ‘Government Efficiency’ factor, which is the factor of interest for this paper as it contains questions relating to regulation, is then split into 5 sub-factors, two of which contain criteria relating to regulation. Within the ‘Institutional Framework’ sub-factor, the survey question “The legal and regulatory framework in your economy 1=restricts the competitiveness of enterprises, 6=encourages the competitiveness of enterprises” is included as one criteria, on which New Zealand ranks 25th out of 61.
The other sub-factor which is of interest is labelled ‘Business legislation’, which is further decomposed into ‘Openness’, ‘Competition and Regulations’, and ‘Labour Regulations’. The various components of the Business Legislation sub-factor are set out in Figure 2 below, along with New Zealand’s rank for each criterion, while Table 1 sets out the best and worst ranked criteria for New Zealand, along with the survey questions for these criteria, in the ‘Openness’ and ‘Competition and Regulation’ components.
| Criteria included in the ‘Openness’ component | Criteria included in the ‘Competition and Regulation’ component | |
|---|---|---|
| Worst Rank |
52nd “Investment incentives are attractive to foreign investors” |
24th “Regulation intensity does not restrain the ability of companies to compete” |
| Best Rank |
4th “Customs authorities facilitate the efficient transit of goods” |
2nd “Subsidies do not distort fair competition and economic development” |
- Figure 2 – Decomposition of the IMD’s Business Legislation sub-factor
Banking regulation is also included in the IMD survey under the ‘Business Efficiency’ factor. The question asked respondents to rank banking regulation from 1 to 6 depending on whether they felt banking regulation hinders competitiveness or does not hinder competitiveness in their economy. New Zealand ranked 13th on this criterion.
One question on Environmental regulations was also included under the ‘Infrastructure’ factor. The question asked respondents whether environmental laws and compliance hindered the competitiveness of businesses. New Zealand ranked last out of the 60 countries in the survey on this question.
This again highlights the need to consider the underlying components rather than the overall indicators. Since the components which make up each sub-factor are based on the subjective judgment of the authors, banking regulation in this survey has been included in another area entirely to the rest of the regulation criteria, as has the question on environmental regulation.
Notes
- [7]The regions used in the sample are: Bavaria, Catalonia, Ile-de-France, Lombardy, Maharashtra, Scotland, the State of Sao Paulo, and Zhejiang.
