Asia's competitiveness highlighted

Asia's competitiveness highlighted

PARIS (AFP): Low labor costs and the relocation of industrial activities are two controversial subjects indirectly highlighted by a report on competitivity which put Singapore and Hong Kong at the top of world rankings last week.

At first sight the high score by many countries in southeast Asia bears out the advantages of low expenditure by the public sector and of low labor costs.

And the report warned that some of these countries are providing their children with a better education than that available in some countries in western Europe.

The authors of the report, the World Economic Forum, which organizes an annual international conference in Davos, noted some of the factors which strengthened competitivity.

These were: an open economy, strong investment, flexible labor markets and high domestic savings.

The listing, which was based on 155 variable factors, put Singapore first, Hong Kong second, Taiwan ninth and Malaysia tenth.

But the balance of factors is complex as shown by the ranking of Japan, in 13th place, and Thailand 14th, and China 36th.

The report noted that countries in southeast Asia are beginning to catch up with standards in advanced industrialized countries, arguing that annual per capita income is higher in Singapore and Hong Kong than in Italy or Canada.

In terms of real personal incomes, Hong Kong and Singapore rank fourth and fifth in the world, but the report did not analyze how wealth was distributed through these populations.

Success in the region was based on open economies. Although many developing countries sought to make imports expensive, countries in southeast Asia concentrated on exporting and welcomed direct investment by foreigners and had won a huge share of such transfers.

Some evidence has also emerged recently that manufacturing companies, in the sector of computers for example, consider production in proximity to markets to be more competitive than in distant, cheap-labor countries, because the costs and delays of transportation can result in the arrival of products which have been out-dated by fast-moving market trends.

Many industrial companies in Germany are seeking to escape from very high domestic labor charges and the high value of the mark. In some cases they turn to sites in Asia, and notably in China, but this is motivated in part by a need to produce close to the new and booming Asian markets.

Each year China attracts investment from abroad of between US$30 billion and $35 billion.

Many German companies are investing heavily in Britain where, some analysis suggests, labor costs in some regions are lower than those in South Korea.

Britain was the highest ranked of leading European countries, being placed 15th, whereas the last country on the basis of competitiveness was Russia, after Brazil, Venezuela, Hungary, India and Poland.

By contrast the United States was placed fourth.