In the latest Global Competitiveness Rankings released by the International Institute for Management Development (IMD), a private research institute in Lausanne, Switzerland, Taiwan slipped seven places compared to last year, falling to 18th place, whereas China jumped 12 places to 19th.
In terms of government efficiency, one of the four major categories considered in the report, Taiwan was ranked 24th, compared to China's 17th place. The Taiwanese press has jumped on the fact that the performance of the government has become Taiwan's Achilles' heel in terms of its competitiveness. They claim the government has become obsessed with politics at the expense of dealing with the economy.
This kind of thinking, however, is a populist interpretation made by people who have not read the report in detail.
There are a total of 312 criteria used in the IMD competitiveness rankings. Two hundred and thirty nine of these are used to appraise performance -- the remaining 73 criteria deal with background information. One hundred and twenty six of the 239 key criteria are hard indicators, such as social and economic indexes, while the other 113 are soft indicators derived mostly from opinion surveys.
Taiwan has either stayed the same or improved in terms of the majority of the hard indicators, and has in fact improved in most of the indicators related to basic infrastructure. The slide has occurred mostly with the soft indicators, the most conspicuous fall being with government efficiency.
A closer look at the government efficiency category reveals that there are 72 sub-indicators, of which 20 are listed under Business Legislation, the largest number of indicators in the government efficiency section, or 28 percent of the total. Of all the indicators in the government efficiency section, legislative efficiency shows the worst performance, a result of the fact that the opposition parties constitute a majority in the legislature.
In the 2006 Bertelsmann Transformation Index, Taiwan's management performance was ranked fifth, compared to China's ranking of 70. The Bertelsmann index includes a "level of difficulty" qualifier on its government efficiency criteria and this gave strong weighting to the paralysis of the legislature at the hands of the opposition.
The majority of the IMD's soft data indicators were derived from "non-specialist" opinion surveys and so were influenced by local media and specific events. With this in mind, a look over the "political risk" category for Taiwan reveals a ranking of 58th place according to the non-professional assessment, fourth from the bottom of the list of 61 countries.
However, according to the Business Environment Risk Intelligence Report, published the same month, Taiwan's political risk index ranking was as high as 15th in the world. The astonishing difference between 15th and 58th place suggests that the ranking for political risk given by the IMD report possibly reflects the general degree of support Taiwanese government currently enjoys, and not its international competitiveness.
Actually, the biggest loser in this year's world competitiveness assessment was China's Zhejiang Province, which slipped 13 places. Also, South Korea, which has been on a China investment binge in recent years, slipped nine places last year. On the other hand, Japan, whose government has actively encouraged investment in India, has jumped up four places.
In summary, the nation's level of government efficiency is not that bad at all.
David Su is a doctoral student in the department of economics at the University of Rhode Island.
TRANSLATED BY PAUL COOPER
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