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Monday, June 20, 2011

Part 3: Welfare state & Nordic model

My Comment on IMD 2011 World Competitiveness Ranking - Part 3

IMD analyze the countries based on four main criteria namely Economic Performance, Government Efficiency, Business Efficiency and Infrastructure.
Among the four criteria above. Malaysia ranking in Infrastructure are most steady and consistent but lowest among the four criteria:
                                         2011                  2010               2009
US                                    1                           1                      1
Sweden                             2                           2                      2
Denmark                           3                           5                      6
Switzerland                       4                           3                       4
Finland                             5                           6                       3
Canada                             6                           4                      7
Germany                           7                           8                       9
Norway                            8                           7                       10
Iceland                              9                           9
Singapore                        10                          11                      8
Japan                              11                          13                      5
Netherlands                     12                          12                     11
Austria                             13                         10                     13
Australia                          14                          18                     12
Israel                                15                         16                     18
Taiwan                             16                          17                    23
UK                                  17                          15                    16
France                             18                         14                     14
Belgium                            19                          19                    15
Korea                              20                          20                    20
Hong Kong                      21                          23                    19
Luxembourg                     22                          21                    17
New Zealand                    23                          22                    21
Iceland                             24                           24                    22
Portugal                            25                          29                    24
Spain                                26                           28                   31
Malaysia                          27                           26                    25

US top in Infrastructure, and Sweden second for 3 consecutive year. Sweden ranked no 4 this year from 6 previous year in IMD 2011 Competitiveness ranking

Malaysia consistently ranked around 25 to 27 in a dropping trend

If Malaysia want to improve in Competitiveness ranking. Improvement in Infrastructure category have the highest chance to improve it overall ranking as Malaysia ranking in Infrastructure remain consistent even Malaysia IMD Competitiveness ranking moving up and down in the last 3 years.

Among all the country. All Nordic Model countries or Scandinavia ranked within top 10 of infrastructure ranking. This is similar to welfare state debated heavily recently among ruling party and opposition PAS.

However, Nordic model are high tax country. Sweden (2) are the highest tax rate country in the world. Ikea, a Swedish company, move to Denmark initially and later to Switzerland due to high tax rate.

US (1) ranked first under Infrastructure category but have more competitive tax rate compare to Nordic model country. Among the country within top 10 under Infrastructure. Singapore, the only aisa country. consistently ranked within top 10 ranking with much lower tax rate than US and other western countries.

I feel it is a bit difficult to model against Sweden if PAS or Pakatan Raykay want to implement welfare state especially it high tax rate. Despite I have advocate Malaysia to follow Sweden, but not on the tax rate. Sweden company like Sony Erricson, Electrolux also not the most competitive company in the world. However, Sweden are one of the countries that invest most in R&D in terms of percentage of GDP.

Furthermore, Sweden ranked either as the first or second country publishing the highest number of scientific publications in the fields of medical science, natural science  and engineering in 2001. Sweden was world-leading in medical science and second only to Switzerland in natural science and engineering in terms of the number of publications per capita.

However, there is more information and publication that able to obtian on Finland then Sweden. Thus, it is far more easy to model against Finland than Sweden. Finland has high number of NGO and active civic society.However, in Malaysia, NGO are used to push up water tariff. Malaysia can't rank high in infrastructure if utility cost are high.

Further, Finland company like Nokia are more competitive than Sweden Sony Erricson. Further, Finland have more technology innovation like Linux,email and recently Angry Bird game etc.

However, Nordic Model countries have strong labour Union, which is bad on economic base on history in UK. UK in reccession under ruling Labour Party until take over by Margaret Thatcher Conservative Party. However, UK has loss it competitiveness to Germany. Thus, both BN and Pakatan Rakyat in Malaysia should learn from this experience.

In Finland , Education is compulsory between the ages of 7 and 16 . Tertiary education is free and living expenses are to a large extent financed by the government through student benefits. If Education is free, then, the recent Public Service Department (PSD) scholarship mess can be avoided.

Last year, Malaysia ranked 10th in IMD Competitiveness ranking in 2010 and Norway ranked 9th. Sadly, Non of the private sector nor GLC HQ model again DIGI HQ D'House . Digi are only one of successful company from Norway in Malaysia. However, it is undeniable that Malaysia working cultural a bit difficult to change to D'House Model.

Base on the above analysis. I feel Malaysia can model against Finland and Singapore on Infrastructure

Related Post:
Lim Kit Siang : Why do Finland’s schools get the best results?
Randon Shots : Finland...Where Less Is More

Part 2: Economic Performance
Next Part 4: Business Efficiency


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