South Korea’s global competitiveness ranking stayed at 10th out of 14 Asia-Pacific countries in a report released this week by the Swiss researcher International Institute for Management Development. 

Out of the surveyed 61 countries across the world, Korea ranked 29th. Asia’s fourth-largest economy was behind Malaysia (19th), China (25th) and Thailand (28th).

Besides these rankings, the nation’s corporate sector ranking was also somewhat shocking.

Korea was 48th in overall business efficiency. It ranked bottom among the 61 countries in management practices and its ranking for corporate management practices plunged eight notches compared to the previous year. In addition, enterprises’ productivity ranking stood at 38th.

The IMD’s report should be taken as a warning that the government should concentrate on regenerating economic dynamism. It is widely recognized that Korea has a couple of years left before high growth becomes impossible for demographic reasons. If we waste what little time there is left, the window of opportunity for the nation to join the ranks of the most advanced countries will close forever.

Korea’s industrial prowess, built on manufacturing and heavy industries over the past decades, has been declining rapidly. Cases in point are the shipbuilding and shipping sectors, which have fallen from the once proud engines of Korea’s export-driven economy to sources of woe.

Some policymakers argue that the extended slowdown in the global economy is partly to blame for the decline of the industries that once buttressed the Korean economy. But it is not a coincidence that the Korean economy has been stuck in a low-growth trap, as its traditionally strong industries like shipbuilding, steel and petrochemicals are losing their competitiveness.

This means the time has come for the Korean economy to redraw its industrial map to lessen its dependency on traditional industries and nurture new industries like artificial intelligence, electric vehicles and driverless cars, big data, financial technology and biotechnology.

Government policies on the new industries should be different from the ones that were needed to build industries such as shipbuilding, automobiles, electronics and steel.

Also important is eliminating government regulations, and paving the way for small and medium-sized enterprises to assume a greater role in the development of the new industries.

Labor unions also have much to do to enhance competitiveness. As the IMD’s annual report shows, the lack of flexibility in labor relations poses a threat to the state drive for competitiveness. Foreign business concerns often cite union hostilities as a major cause of abandoning Korea as a host to their investments.

Korea ranked 51st in terms of labor market, down sharply from 35th a year earlier.

Meanwhile, the Organization for Economic Development and Cooperation earlier compared the ratio of household debt to national disposable income among some of its members. Out the surveyed 27 OECD members, Korean ranked ninth in the undesirable ratio.

The figure indicates that local consumers on average have less capacity to spend due to their heavy borrowing, which could eventually nibble away at the nation’s growth potential. And solid global competitiveness is hard to attain for a nation whose growth rate has stalled.