South Korea ranked 21st among 70 countries surveyed in the International Institute for Management Development (IMD) "World Competitiveness Ranking." That marks a rise of six places from last year's 27th, but falls short of the country's record-best 20th in 2024. The government nonetheless offered a positive assessment, noting that Korea placed second only to the United States among members of the so-called "30-50 Club" — countries with per capita income above $30,000 and populations exceeding 50 million. Yet given the reality that Korea lags far behind Asian rivals such as Taiwan (4th) and China (12th), this interpretation has a complacent aspect.
Rather than rejoicing or despairing over IMD rankings that rise and fall each year, attention should focus on the core indicators that reflect the perceptions of domestic business leaders. IMD evaluates overall national competitiveness across four categories. In this year's assessment, business efficiency (44th, up from 34th) and infrastructure (21st, up from 15th) rose in ranking, but fell short of their 2024 levels of 23rd and 11th, respectively. Economic performance (11th, down to 14th) declined, while government efficiency stayed in place at 31st.
In particular, "business conditions," one of the detailed sub-items in the government efficiency category, fell three more places to 53rd. This demonstrates that although the Lee Jae-myung administration espouses a "pro-business, pro-growth" stance, the reality is that the management environment has worsened due to various business activity regulations and labor regulations. The uniform 52-hour workweek, excessive protection of regular workers, and market entry barriers appear to have had an impact. The labor market ranking, a detailed sub-item in the business efficiency category, also remained at 45th. Rigid labor-management relations and low labor productivity are holding back improvements in corporate competitiveness.
At his press conference marking the first anniversary of his inauguration, President Lee set becoming an industrial powerhouse with an insurmountable lead as the top state goal for this year. To achieve that, the government must first create an environment conducive to doing business through measures such as eliminating regulations. The implementation of the six major structural reforms — regulation, finance, public sector, pensions, education, and labor — and the "shift to negative regulation" that President Lee declared must also pick up speed in earnest. Above all, it is urgent to supplement laws that burden corporate management, such as the "Yellow Envelope Act," and to enhance labor flexibility. Companies, too, must improve the backward management practices that earn low IMD evaluations every year if they are to enhance their innovation capabilities. President Lee said he would make this year the one in which the dream of an "irreplaceable Korea" — one that no other nation can substitute for — begins. To reach that grand goal, there is no other way than to fundamentally raise national competitiveness.
