Diversification is the key: IMD
Thailand's overall competitiveness could be deteriorating, but in terms of diversification of the economy the Kingdom is faring better than 58 other economies, a study has found.
According to the business school IMD, in terms of diversification of the economy, Thailand ranked 17th last year. Among Asian economies, it lagged behind South Korea (3), Taiwan (4), India (8), Japan (10), Malaysia (14) and mainland China (16). However, its ranking was higher those that of Singapore (20), Indonesia (24), Hong Kong (30) and the Philippines (44).
On top of the chart are the United States and Germany.
“The criterion of the month shows which nations have succeeded in spreading risk in such a fragmented world competitiveness landscape,” IMD said in an e-mailed statement. The Switzerland-based body is the publisher of “World Competitiveness” reports.
Economic diversification is one criterion to determine competitiveness this year. In 2011, Thailand’s competitiveness ranking slipped one place to 27th. In the Asia-Pacific region, its ranking also fell, from ninth to 10th place. Thailand was ranked ninth in 2008 and 2010, an improvement from 11th in 2007.
Economists have said there is a link between economic diversity and sustainability, and diversification can reduce a nation’s economic volatility.
IMD said it perceived that the world economy is fragmenting – and the fragments are moving in different directions at varying speeds.
“To face up to this challenge, businesses need to develop the ability to manage multiple business models in parallel. No single strategy fits all or can cope with the ever-increasing diversity of local economic situations. Flexibility and diversity are the names of the game. Competitive countries will thrive by diversifying their economies,” it said.
It is of the view that the world’s economies are now increasingly desynchronised, more global and more unified than before the crisis of 2008. The recession and the monetary turmoil of the past months have delayed the convergence of the world economy.
Some nations are experiencing overheating (China, Turkey and Argentina), others recession (Greece and Portugal). Some are combating inflation (India and Russia), others deflation (Japan and Switzerland). Some are enjoying a trade surplus (Germany) while others are struggling with trade deficits (Spain and Italy), and so forth.
