National Competitiveness
Korea was ranked at 26th place at the Global Competitiveness Report 2014 by the World Economic Forum (WEF), one level lower from the previous year.
Especially, the rank of the soundness of banks fell almost to the bottom, and ranking of corporate ethics also dropped to the lower end. Personal information leaks in the financial sector, missile launches by North Korea, and the Sewol accident during the first half of this year imposed negative influences onto the overall competitiveness of Korea.
This is the lowest score in ten years since Korea was ranked in 29th place in 2004. The national competitiveness of Korea reached its peak of 11th place in 2007, and rebounded to 19th from 24th in 2012. Except for those two years, Korea has continued to show a downward trend every year.
The International Institute for Management Development (IMD), one of the two major national competitiveness assessment companies, also scored Korea as the 26th place this year.
Looking at the national competitiveness ranking of the WEF by sector, the basic requirements stayed at 20th, the same place compared to last year. Efficiency enhancers dropped from 23rd to 25th, and innovation and sophistication factors from 20th to 22nd.
Among basic requirements, only the macroeconomic environment was ranked higher, from 9th to 7th. All other pillars, institutions (74 to 82), infrastructure (11 to 14) and health and primary education (18 to 27) fell down.
Among efficiency enhancers, financial market development rose from 81st to 80th and market size from 12th to 11th. Higher education and training (19 to 23), labor market efficiency (78 to 86), and technological readiness (22 to 25) all fell. Goods market efficiency stayed at the same place as last year, 33rd.
Within innovation and sophistication factors, business sophistication fell down from 24th to 27th. Innovation stayed at the same place to the last year, 17th.
Through the analysis of 12 pillars under sub-indexes, four factors stayed within top 20th, a sound macroeconomic environment, market size, good infrastructure and innovation, were pointed out as strengths.
However, three pillars stayed out of the 80th position, which are particular weaknesses: low quality public and private institutions, an inflexible and inefficient labor market, and an unsophisticated financial market.
The Ministry of Strategy and Finance announced that statistics indexes, which accounted for 30 percent of the evaluation, improved overall, but survey indexes, which account for the remaining 70 percent, were degraded.
The Ministry of Strategy and Finance also pointed out that personal information leakage in the financial sector, North Korean missile launches, and the Sewol crisis that happened from February to April when the WEF survey was in progress, might have exerted negative effects on sentiments.
In fact, rankings in soundness of banks (113 to 122), business costs of terrorism (106 to 115), intellectual property protection (55 to 64), business costs of crime and violence (60 to 76), organized crime (73 to 93), and corporate ethics (79 to 95) dropped a lot.