Republic slips 3 places in global competitiveness

Rising rates of inflation and a drop in investment by international companies have damaged Ireland's global competitiveness ranking, with the Republic falling three places in the 2007 World Competitiveness Yearbook.

The Republic has fallen from 11th to 14th place, where it is sandwiched between Norway and mainland China, according to the yearbook, which is compiled by Swiss business school IMD.

The Republic's fall from grace was the result of a dramatic drop in its economic performance, which went down from ninth to 25th place in the rankings. As well as declining direct inward investment - in terms of both US dollars and as a percentage of gross domestic product (GDP) - one of the Republic's economic "weaknesses" was identified as the cost of living.

An "executive opinion" survey suggests that more Irish managers believe that the relocation of production and services is a threat to the future of the economy.

The Republic's highest position in the competitiveness rankings was fifth, which it achieved in 2000. It had fallen to 11th place by 2003, however, while an improvement to 10th place the following year proved short-lived.

In the 2007 yearbook the US once again topped the rankings, with Singapore, Hong Kong, Luxembourg and Denmark making up the rest of the top five. Venezuela was named as the least competitive country - in 55th place.

The IMD rates countries by economic performance, government efficiency, business efficiency and infrastructure, amalgamating 323 criteria to assess competitiveness. Infrastructure has traditionally been a weak spot for the Republic and it remained in 24th place when ranked according to "the extent to which basic technological, scientific and human resources meet the needs of business". On infrastructure, investment in telecommunications as a percentage of GDP was listed as the main weakness.

On government and business efficiency, however, the Republic improved its performance.

The low corporate tax rate was listed as the main strength in the government efficiency category, where the Republic climbed from seventh to fifth place.

On business efficiency, the Republic rose from eighth to sixth place, with its image abroad seen as a strength for encouraging business development.

When judged against countries with populations below 20 million, the Republic was listed in 11th place, down from eighth.

Prof Stéphane Garelli, of the IMD, identified the US trade balance deficit and US budget deficit as the main issues which would affect the world competitiveness landscape between now and 2050. Oil prices surpassing the $60-a-barrel mark was the third most important factor, while increased demand for commodities and an over-consumption of raw materials by China and India came next on the list. The bursting of global property bubbles is also among the top 10 factors.