Is Forbes ranking papering over the cracks?

November 26, 2012

Recently Forbes magazine published its rankings of the best country in the world for ‘business’. New Zealand topped the list this year, moving up from second place in 2011. In constructing this ranking Forbes uses the following factors: Property rights, innovation, taxes, technology, corruption, freedom (personal, trade and monetary), red tape, investor protection and stock market performance. In their explanation of granting New Zealand the top spot Forbes explains:

New Zealand’s economy is closely tied to Australia’s, and both held up better than most during the global financial crisis…. New Zealand cut its corporate tax rate from 30% to 28% last year and eliminated certain deductions, making the cut fiscally neutral. Investors have prospered, with the country’s benchmark stock index, the NZX 50, up 24% over the past 12 months.

The problem with this kind of ranking is that it tends to create complacency, and therefore demands a critical analysis, with this in mind I asked a couple of my colleagues to provide their take on this ranking and its meaning for New Zealand. Here are their responses:

Dr James Lockhart:

“This ranking is not related to the nation in which business performs best, or achieves the highest growth, has the greatest impact, is the most sustainable and so on.  It is all about the compliance and regulatory regime as opposed to the actual performance environment of innovation, research, growth, profit, development and longevity.  Under these metrics a nation could be the best country ‘for business’ and be the worst performing country.  Tragically this kind of press continues to mask New Zealand’s inexorable decline in business performance.  Were New Zealand ranked one of the best countries in the world for business, and one of the best countries in the world for business performance then it would be worth getting excited about”

Professor David Deakins:

“No surprises in that article, New Zealand regularly features as the number three behind Singapore and Hong Kong as the ‘easiest country to do business’ in the World Bank reports and as a country in which to start a new business it comes in at number one. However, a more important issue is that New Zealand does not provide an infrastructure that will support and retain high growth businesses and has a relatively poor performance in business R&D and proportion of firms who export.”

Unfortunately Forbes’ ranking clings like a poorly applied veneer to what many might argue is more like a structure on a lean, the Real New Zealand business environment.

Compiled by: Dr Andrew Dickson,


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The Other Side of Business

Welcome to The Other Side of Business. This is a blog that collects and distributes the opinion and analysis of staff and students from the School of Management, College of Business, Massey University. The aim is to post once or twice a month on current issues in business... Read more