Ireland is 11th most competitive

Ireland has jumped from 16th to 11th place in world competitiveness rankings, according to the World Economic Forum.

The ranking puts us just above Japan but below the US, Britain and Switzerland among others.

The significant movers over the past year include: Britain, up three at fourth; the Netherlands, 7th up five; Ireland, 11th up five; and Finland and Denmark 15th and 16th respectively, both up four.

South-east Asian countries have shown most slippage, although Singapore and Hong Kong retain first and second place respectively.

The jump for Ireland mirrors our placing in the separate International Institute of Management Development's report last month, which also placed Ireland in 11th place, up four. However, it had a slightly different order at the top and placed Britain 12th rather than fourth. The World Forum and the International Institute used to do a joint study, but now publish separate rankings.

In the latest study, Dr Jeffrey Sachs, professor of economics at Harvard University and Dr Andrew Warner of the Harvard Institute of International Development, Ireland fits into the Anglo-Saxon group of countries along with Britain, Australia, Canada, New Zealand and the US. This is the second most competitive group of countries, ranking first on technology and infrastructure.

In contrast, the other EU economies, which include all continental economies with the exception of Luxembourg and Switzerland, come only fourth in competitiveness behind some of the other Europeans, some Asians and the Anglo-Saxon economies.

This relatively low ranking reflects their combination of moderately high rankings on the openness of their markets and the efficiency of their institutions, combined with continuing fiscal, financial and employment problems that reduce their rankings on government and labour markets.

The three largest EU economies: France, 22nd position; Germany, 24th; and Italy, 41st; rank about the same as last year. They tend to have high scores on infrastructure, technology and management, but these are offset by low scores on government and labour markets, according to the Forum.

The most competitive group of countries are called the "Entrepot" economies, a small group of highly open economies that specialise in providing trade and financial services to the rest of the world.

These are Hong Kong, Luxembourg, Singapore and Sweden. They score highest on all the factors except technology and institutions where the Anglo-Saxon countries rank first.

One of the main reasons that the Anglo-Saxon countries, including Ireland, score higher than the continental EU is lower costs, according to the authors.

According to the report, Ireland's assets include: the openness of our export policy; corporation tax rates; technology transfer; primary and secondary education system; and international relations.

However, the liabilities, which hold back our competitiveness include the high VAT rate, environmental spending and domestic investment.

There is also a problem with labour market flexibility, unemployment insurance, as well as the number of private business disputes and high litigation costs.