[Editorial] Raise competitiveness
South Korea's ranking falls seven notches, affected by worsened business efficiency
South Korea's global competitiveness ranking dropped seven notches in 2025.
According to the Finance Ministry on Tuesday, the latest report from the International Institute for Management Development showed South Korea ranked 27th among 69 countries surveyed.
It was the largest decline since the institute announced South Korea's ranking for the first time in 1997.
Last year, South Korea rose eight notches from 28th to a record high of 20th, but in a year, it returned to the level of two years ago.
The IMD, a Switzerland-based business school, has published its annual World Competitiveness Ranking since 1989, evaluating countries in four key factors: economic performance, government efficiency, business efficiency and infrastructure.
Business efficiency was the most decisive factor dragging down South Korea's ranking this year. In that category, it dropped from 23rd to 44th and in infrastructure from 11th to 21st, but climbed from 16th to 11th in economic performance and from 39th to 31st in government efficiency.
South Korea's position fell in all five sub-factors of business efficiency — productivity (from 33rd to 45th), labor market (from 31st to 53rd), finance (from 29th to 33rd), management practices (from 28th to 55th) and attitudes and values (from 11th to 33rd).
Declines in its ranking were pronounced in some specific indicators, including efficiency of large corporations (from 41st to 57th), corporate response to opportunities and threats (from 17th to 52nd), agility of companies (from ninth to 46th) and attracting and retaining talent (from sixth to 29th).
These results are apparently caused by a combination of the weakened competitiveness of South Korea's major industries, the rapid emergence of Chinese companies, labor-management conflict and other factors.
A notable category was technological infrastructure, where South Korea's place plunged from 16th to 39th. It also scored low in the availability of digital and technological skills, cybersecurity and others.
In a global market characterized by fierce high-tech and digital competition, weakened infrastructure will undermine South Korea's growth potential.
The IMD competitiveness rankings cannot be seen as absolutely reliable, considering that they are much affected by an opinion survey of business executives. Yet they are useful reference data for the Lee Jae Myung government in making policy.
South Korea's ranking this year can be seen as a warning from the IMD that if the country fails to revitalize enterprise activities and develop new technologies, it could drop out of global competition for good.
The decline in its labor market ranking should be taken seriously. Apparently, this is caused by a rigid enforcement of the 52-hour workweek, an excessive protection of full-time regular staff compared with non-regular workers, seniority-based wage system, labor union demands for shorter working hours and legislators' moves to curtail the standard workweek to 4 1/2 days.
South Korea also needs to improve productivity and management practices. The decline of its rankings in these fields indicates that South Korean companies are slow in high-tech development and underprepared to secure a competitive edge in the age of artificial intelligence. It also shows that their management innovations remain disappointing.
Taipei and China, among others, are far ahead of South Korea, ranking sixth and 16th, respectively, this year. The countries compete directly with South Korea in semiconductors and many other industries. The government should analyze their competitiveness and figure out ways to narrow the gap with them. It should foster creativity and innovation, rebuild technological infrastructure and produce talent.
The key to raising competitiveness is to create and maintain an environment conducive to business activity. Barriers to business should be eliminated immediately. The government should listen more carefully to business concerns about legislators' push to make the yellow envelope bill into law and revise the Commercial Act. Under the Commercial Act revision bill, company directors would have a fiduciary duty to shareholders, not only to their companies. If the two bills are implemented, South Korea's ranking could fall further next year.
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[Editorial] Raise competitiveness
South Korea's ranking falls seven notches, affected by worsened business efficiency South Korea's global competitiveness ranking dropped seven notches in 2025. According to the Finance Ministry on Tuesday, the latest report from the International Institute for Management Development showed South Korea ranked 27th among 69 countries surveyed. It was the largest decline since the institute announced South Korea's ranking for the first time in 1997. Last year, South Korea rose eight notches from 28th to a record high of 20th, but in a year, it returned to the level of two years ago. The IMD, a Switzerland-based business school, has published its annual World Competitiveness Ranking since 1989, evaluating countries in four key factors: economic performance, government efficiency, business efficiency and infrastructure. Business efficiency was the most decisive factor dragging down South Korea's ranking this year. In that category, it dropped from 23rd to 44th and in infrastructure from 11th to 21st, but climbed from 16th to 11th in economic performance and from 39th to 31st in government efficiency. South Korea's position fell in all five sub-factors of business efficiency — productivity (from 33rd to 45th), labor market (from 31st to 53rd), finance (from 29th to 33rd), management practices (from 28th to 55th) and attitudes and values (from 11th to 33rd). Declines in its ranking were pronounced in some specific indicators, including efficiency of large corporations (from 41st to 57th), corporate response to opportunities and threats (from 17th to 52nd), agility of companies (from ninth to 46th) and attracting and retaining talent (from sixth to 29th). These results are apparently caused by a combination of the weakened competitiveness of South Korea's major industries, the rapid emergence of Chinese companies, labor-management conflict and other factors. A notable category was technological infrastructure, where South Korea's place plunged from 16th to 39th. It also scored low in the availability of digital and technological skills, cybersecurity and others. In a global market characterized by fierce high-tech and digital competition, weakened infrastructure will undermine South Korea's growth potential. The IMD competitiveness rankings cannot be seen as absolutely reliable, considering that they are much affected by an opinion survey of business executives. Yet they are useful reference data for the Lee Jae Myung government in making policy. South Korea's ranking this year can be seen as a warning from the IMD that if the country fails to revitalize enterprise activities and develop new technologies, it could drop out of global competition for good. The decline in its labor market ranking should be taken seriously. Apparently, this is caused by a rigid enforcement of the 52-hour workweek, an excessive protection of full-time regular staff compared with non-regular workers, seniority-based wage system, labor union demands for shorter working hours and legislators' moves to curtail the standard workweek to 4 1/2 days. South Korea also needs to improve productivity and management practices. The decline of its rankings in these fields indicates that South Korean companies are slow in high-tech development and underprepared to secure a competitive edge in the age of artificial intelligence. It also shows that their management innovations remain disappointing. Taipei and China, among others, are far ahead of South Korea, ranking sixth and 16th, respectively, this year. The countries compete directly with South Korea in semiconductors and many other industries. The government should analyze their competitiveness and figure out ways to narrow the gap with them. It should foster creativity and innovation, rebuild technological infrastructure and produce talent. The key to raising competitiveness is to create and maintain an environment conducive to business activity. Barriers to business should be eliminated immediately. The government should listen more carefully to business concerns about legislators' push to make the yellow envelope bill into law and revise the Commercial Act. Under the Commercial Act revision bill, company directors would have a fiduciary duty to shareholders, not only to their companies. If the two bills are implemented, South Korea's ranking could fall further next year.
