Taiwan this year fell three places to 17th in a global competitiveness ranking by Lausanne, Switzerland-based International Institute for Management Development (IMD).
It was the lowest ranking since 2009, after Taiwan lost points in the areas of economic performance, foreign investment and the labor market, the business school said in its annual report.
The result placed Taiwan behind major trade rivals Hong Kong, Singapore and China, although it managed to stay ahead of South Korea and Japan.
The school graded 63 economies in terms of economic performance, government and business efficiency and infrastructure.
Taiwan’s economic showing dropped two places, dragged by a serious retreat in foreign investment, the report said, as corporate managers voiced concern that the global industrial realignment might dim its economic outlook.
Persistent overconcentration on a few export destinations and products weighed on the nation’s international trade ranking, even though account surpluses continued to support GDP growth, the school said.
Electronic components, especially semiconductors, underpinned the nation’s outbound shipments to major trading partners, with China taking a 40 percent share, government data showed.
Nations at the top of the ranking share an above-par performance across all competitiveness factors, despite a varied competitiveness mix, IMD World Competitiveness Center director Arturo Bris said.
Asian nations that have fallen in the ranking this year show a need to improve their tangible and scientific infrastructure, Bris added.
However, Taiwan is the exception, the school said on its Web site.
Taiwan’s business efficiency fell five positions to 20th, while the labor market score fell sharply, the report showed.
Labor rules that require higher overtime pay and shorter working hours have estranged corporate managers, the National Development Council said.
“The retreat is an alarm signaling an economic downturn. The government will press ahead with the pursuit of an inclusive economic growth model that will benefit all participants,” council Minister Chen Mei-ling (陳美伶) told a news conference.
It is not surprising that China outpaces Taiwan in competitiveness, because it has spent more money on enhancing infrastructure, Chen said.
The government has been removing regulatory barriers and introducing measures to attract foreign investment and talent, she said. “It might take more time for foreign research institutes to observe positive changes.”
Foreign investments and tourist numbers have showed signs of growth this year, while the government is considering relaxing immigration rules, she said, after IMD warned that the brain drain problem might hurt Taiwan if left unaddressed.
The nation’s competitiveness has stagnated, while other nations have gained headway, Taiwan Institute of Economic Research (台灣經濟研究院) economist Gordon Sun (孫明德) said.
Firms in China and elsewhere are recruiting skilled labor from Taiwan with better compensation offers, Sun said, adding that the issue merits more attention from policymakers and firms.
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