South Africa’s economic performance catapults country into higher World Competitiveness ranking
Economic performance supported by continued productivity growth has changed the course of South Africa’s position in world competitiveness.
This is evidenced in the newly released World Competitiveness Yearbook 2005 in which South Africa has jumped three rankings to an overall position of 46th out of 60 countries.
The turnaround can largely be ascribed to superior economic performance based on sustained productivity growth. Productivity SA research findings point to a 3,2% per annum increase in private sector productivity since 1996. This continuous rise in productivity performance has laid the supporting structures for the country’s improved international competitiveness.
According to Productivity SA, a comparison of national economies has shown that the more productive the national economy becomes, the higher the personal income of workers and the lower the rate of inflation in the long run. When the economy increases its productivity levels it becomes more competitive and tends to lower the rate of unemployment. The more productive an enterprise or organisation, the more income it generates and saves for investment which could lead to job creation. In this case, more jobs can be created. Since productivity results in the efficient use of resources, it contributes positively to sustainable development. Continued acceleration in economic growth and human capital are a driving force in employment creation. All stakeholders, including private and public sector, must take advantage of this positive development to deal with unemployment and improve the comparative advantage of South Africa.
While the domestic economy advanced two positions, international trade improved from 52nd to 21st position. International investment is also looking healthy at a new place of 28th up from 57th last year. Price stability in which we traditionally performed well - ranking 5th last year - improved to 1st position this year, endorsing the prudent decisions of the monetary authorities.
The downward trend in overall economic rankings between 2001 and 2004, has undergone a dramatic turnaround from 58th position in 2004 to 42nd in 2005.
Government efficiency remains the leading factor contributing to South Africa’s overall performance ranking at 34th compared to business efficiency at 40th, economic performance at 42nd and infrastructure at 58th. Better public finance (30th) and fiscal policy (11th) being the main contributors to this performance.
South Africa’s economic performance is supported from contributions by inward direct investment of stocks, and real growth in exports of commercial services where we score 2nd place. Further strengthening factors include consumer price inflation at 11th position, tourism receipts (17th) and export of goods (19th).
Competitiveness support comes from the business sector which remains strong in the productive management of companies ranking 7th. This is enhanced by the social responsibilities of business leaders towards society in which our ranking 8th.
Whilst Infrastructure rankings were on par with the economic performance in 2001 and 2002 (47th and 44th respectively), there is a need to pay attention on this area since slipped to positions 55 and 58 during 2003 and 2005 respectively.
A factor that bodes well for the future of the economy is that business executives will continue to source their research and development locally. This means that local human capital will be increasingly used. De Jager says economic reseach has shown that growth in human capital is one of the strongest contributors to future economic growth.
The major stumbling blocks with business efficiency remains the inadequacy of skilled labour, the brain drain, low employment rate, insufficient finance skills, and shortages of competent senior managers and entrepreneurs which all ranked lower than 55. A disturbing factor is the lack of customer satisfaction that is not emphasised enough in our economy.
Although the rankings of government efficiency, business efficiency and infrastructure have deteriorated in the last year, the country’s strong economic performance has enabled an improvement in overall rankings.
South Africa’s strong productivity performance has facilitated better international trade and international investment. This has been supported by prudent fiscal policies and price stability which enabled the country to dramatically turnaround its economic performance competitiveness rankings.
FURTHER INFORMATION: Productivity SA
CONTACT PERSONS: Bertha Peters-Scheepers
Media Liaison
Tel: +27 (11) 848 5397 Fax: +27 (11) 848 5555
Cell: 082 785 4367
E-mail: berthas@productivitysa.co.za
OR
Olwetu Gwanya
Media Liaison
Tel: +27 (11) 848 5384 Fax: +27 (11) 848 5555
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E-mail: olwetug@productivitysa.co.za
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