NZ rated 11th best country in the world for growing business
New Zealand rated 11th best country in the world for growing businesses
The Grant Thornton Global Dynamism Index
ranks 50 countries based on 22 indicators
30
September 2012
http://www.grantthornton.co.nz/Assets/documents/pubSeminars/Global-dynamism-index-2012.pdf
The link to all the data www.globaldynamismindex.com
New
Zealand is the 11th best country in the world for supporting
and enabling dynamic growing businessesaccording to the
Grant Thornton Global Dynamism Index (GDI). However, the
global ranking of 33rdin the economics and growth driver
confirms that New Zealand needs many more growth companies.
Given our population and the size and scale of our economy
relative to its land mass, the unanswered question is, can
we improve our position within the next 10 years?
Singapore is currently ranked No. 1 with neighbours Australia in 6th place and the United States 10th.
Mark Hucklesby, National Technical Director of Grant Thornton New Zealand, said the ratings portray New Zealand’s ability to support dynamic growing businesses in a good light, providing significant comfort on how well placed we are to support growth out of the financial doldrums. What makes Grant Thornton’s Index different is that it draws not only on basic GDP data, but also upon indicators from a variety of sources including: the Economist Intelligence Unit (EIU), the World Bank, Thomson Financial, UNESCO and the views of 406 senior executives in 50 countries who were asked to identify what environmental factors they believed impacted the growth of their businesses.
“Senior executive involvement allowed us to weight each aspect of business growth according to its perceived relevance. Rather than provide a measure of an economy’s success during a period of high economic turbulence, this iteration provides a trueillustration of the strength of each economy as a place for dynamic businesses to flourish,” he said.
“The results are a positive indicator of the way we do business in this country, although the figures do identify a couple of areas of concern for the New Zealand economy,” he said.
“Five areas were identified as holding the key drivers
to an economy’s dynamism - business operating environment,
science and technology, labour and human capital, economics
and growth and the
financing environment. Within these
groups, there were 22 key data points that were analysed to
generate the index rankings.
Singapore leads theworld with an index rating of (72.1) followed by Finland 70.5, Sweden 69.6,Israel 69.3, Austria 66.1, Australia 65.6, Switzerland 65.1, South Korea 64.6, Germany 64.8, United Stated 64.1 and New Zealand 63.9.
“New Zealand performed best in the Labour and Human Capital driver where we were ranked fifth in the world. We were seventh in Financing and Environment, ninth in Business Operating Environment, but 26th in Science and Technology and 33rd in Economics and Growth.
“We only spend 1.3% of total GDP on Research and Development compared with an OECD average of 2.4% and upwards of 5% for some Scandinavian countries, therefore, finding us at 26th in Science and Technology and 33rd in Economics and Growth comes as no surprise. The knock on effect of New Zealand’s very poor record in R&D is that our growth prospects have suffered.”
However, Hucklesby said that it was pleasing to see the Prime Minister John Key and Science and Innovation Minister Steve Joyce last month exhorting more spending on R&D and backing these statements with a plan to put aside $166 million over thenext four years to establish a new advanced technology institute to encourage more innovation in the manufacturing and services centre.
“I see that this is planned to be a one-stop-shop to connect high-tech firms to innovation and business development expertise and support within the centre, around the country and internationally.
“However, this can only be viewed as a start. We actually need a paradigm shift in the way we deal with many of our exported products. It is a topic that has been discussed in New Zealand for decades, but we still send a large proportion of primary goods overseaswith little or no value added. And that is only one area where R&D could benefit the country. Biotech is another good example.”
Global observations
The release of Grant Thornton’s 2012 GDI comes at a time of continuing global economic uncertainty. In Europe, the severe austerity measures being used to reign in huge budget deficits appear to be choking growth prospects. In the United States, growth and jobcreation remain slow whilst the return of polarising partisan politics is preventing any meaningful discussion of how to tackle the growing mountain of government debt. In Japan, anemic growth rates were compounded by the devastating earthquake and tsunami of March 2011.
Growth prospects are healthier in emerging markets. Indeed, over the next five years the IMF expects emergingmarket economies to grow at around 7.8% per annum, compared with 3.2% per annum in mature economies. However, even these markets are now wrestling with their new status and facing a growth slowdown. In India, the government is battling corruption scandals, high inflation, a declining rupee and a marked slowdown in growth. In Brazil, growth tailed off towards the end of 2011, and the government is now rapidly cutting back interest rates in a bid to boost industry.
Turkey is currently running acurrent account deficit of more than 10%, which is being financed with potentially dangerous inflows of “hot money”1 from abroad. Even in China, the target growth rate has been cut and the full extent of the level of the bad debt taken on by local government as part of the large 2008 stimulus programme has yet to be determined.
The 10 economies which sit at the top of the GDI are varied, showing that there are many paths to dynamism. There are three economies from Asia Pacific – Australia, Singapore and Korea; a further five are from Europe – Austria, Germany, Finland, Sweden and Switzerland; the United States from North America and Israel from the Middle East.
These 10 economies represent a diverse set of economic and political conditions but one thing binding them together is that they are regarded as having industrialised, indicating that a dynamic business environment cannot be built overnight.
1’Hot money’ refers to speculative capital flows that can move very quickly in and out of markets.
Singapore, a small, open economy which
industrialised rapidly in the 1970s and 1980s, sits at the
top of Grant Thornton’s GDI. Singapore appears well-placed
to act as a gateway for dynamic businesses from mature
markets seeking the greater returns on offer in the
high-growth markets of Asia. Its economy comes top for
financing environment globally, and sits no lower than 11th
in any of the five categories.
Two Scandinavian countries come next, with Finland slightly ahead of Sweden. The Eurozone crisis has clearly hurt the economies of both nations, but the GDI suggests that longer term growth fundamentals are robust.
Both economies sit in the topthree for both business operating environment and science and technology, with Finland behind only Singapore in terms of its financing environment.
Korea is the highest
placed member of the Growth-8, a grouping of the largest
high-growth markets. However, China is the only other member
of this group, which sits in the top half of the index.
Indeed India, Indonesia and Russia sit in the bottom ten,
emphasising that dynamism is far more than just another
measure of growth.
Overall
Rankings
1. Singapore 72.1
2.
Finland 70.5
3. Sweden 69.6
4. Israel 69.3
5.
Austria 66.1
6. Australia 65.6
7.
Switzerland 65.1
8. South Korea 64.9
9. Germany
64.8
10. United States 64.1
(link to
complete list of 50 countries: www.globaldynamismindex.com)
A. Business
operating environment
(Foreign trade and
exchange regimes and controls; policy towards private
enterprise and competition; political stability; and legal
and regulatory risk)
1. Finland 94.2
2.
Ireland 93.4
3. Sweden 92.8
4. Netherlands 91.5
5.
Denmark 91.4
6. Canada 91.2
7.
Australia 90.7
7. Luxembourg 90.7
9. New
Zealand 90.4
10. Austria 90.1
B. Science and technology
(Broadband subscriber lines per 100 inhabitants; growth
in broadband subscriber lines;R&D as % of GDP; total IT
spending growth)
1. Israel 73.0
2.
Finland 65.8
3. Sweden 64.9
4. South Korea 61.0
5.
Switzerland 59.0
6. Japan 58.8
7. Denmark 56.4
8.
Taiwan 53.9
9. Germany 53.5
10. UAE 53.2
C. Labour and human
capital
(Labour productivity growth;
unemployment; school life expectancy; % of population under
30.)
1. Argentina 72.5
2. Slovak Republic
72.4
3. Uruguay 69.0
4. China 67.4
5. New
Zealand 65.6
6. South Korea 64.1
7.
Australia 63.9
8. Norway 62.4
9.
Indonesia 62.1
10. Taiwan 61.6
D. Financing environment
(Quality
of overall financial regulatory system; access of firms to
medium-term capital; growth in value of inward M&A deals;
value of inward M&A deals; private sector credit as % of
GDP; inward direct investment growth; corporate tax
burden.)
1. Singapore 82.2
2.
Finland 72.3
3. France 71.8
4. Austria 71.4
4.
Chile 71.4
6. Poland 70.4
7. New Zealand 69.8
8.
United States 69.5
9. Israel 68.3
10.
Slovenia 67.6
E. Economics and
growth
(Real GDP growth; private consumption per
head; change in $ value of stock marketindex.)
1. Argentina 95.6
2. China 94.6
3.
Uruguay 82.3
4. Chile 80.6
5. India 80.0
6.
Indonesia 79.8
7. Nigeria 79.4
8. Turkey 78.0
9.
Singapore 75.3
10. Colombia 73.8
10. Russia 73.8
New Zealand
Profile
Rank/50 Score/100
Overall 11 63.9
Business
operating environment 9 90.4
Science and
technology 26 36.7
Labour & human
capital 5 65.6
Financing
environment 7 69.8
Economics & growth 33 57.1
Indicator scores grouped
Poor (scores <=33)
•
R&D as % of GDP
• % of population under 30
•
Growth in value of inward M&A deals
• Value of
inward M&A deals
• Inward direct investment
Modest (scores 33-66)
• Growth
in broadband
• Total IT spending growth
•
Labour productivity growth
• Private sector credit
as % of GDP
• Real GDP growth
• Change in
$value of stock market index
Good
(scores >=66)
• Foreign trade and exchange
regimes and controls
• Policy towards private
enterprise and competition
• Political
stability
• Legal and regulatory risk
•
Broadband subscriber lines per 100 inhabitants
•
Unemployment
• School life expectancy
•
Quality of overall financial regulatory system
•
Access of firms to medium-term capital
• Corporate
tax burden
• Private consumption per head
– ends –
Notes to editors
To find out more
about the Grant Thornton GDI, go to www.gti.org/thinking or to access the
results directly go to www.globaldynamismindex.com. Note: This
site is under embargo until 28 September, but date lines
mean that the site won’t be available until late evening
New Zealand time.
Indicators
Categories and indicators
were selected on the basis of expertanalysis by the
Economist Intelligence
Unit (EIU). Indicators are drawn
from a variety of sources, including: the EIU, the World
Bank, Thomson Financial and UNESCO. Please refer to figure
14 for a full list of indicators and sources.
The survey respondents held C-Suite, board roles or other senior decision making roles in a wide variety of sectors and geographical regions. Around half were drawn from businesses with global annual revenues exceeding $500m. Thesurvey was conducted by the Thought Leadership team at the EIU with respondents asked to assign an importance to each of the indicators for their company.
Data
modelling
Modelling the indicators and
categories results in scores of 0-100 for each country,
where 100 represents the most dynamic environment and 0 the
least. The overall score, as well as the category
scores,
are averages of the normalised scores for each of the
indicators. Each economy is then ranked according to these
scores. Indicator scores are normalised and then aggregated
across categories to enable a comparison of broader concepts
across countries. Normalisation rebases the raw
indicator
to a common unit so that it can be aggregated.
For further details refer back to the report www.globaldynamismindex.com.