Business efficiency, infrastructure gains drive rise despite weaker economic performance
South Korea has achieved its second-highest position ever in the Institute for Management Development’s (IMD) World Competitiveness Ranking, securing 21st place among 70 economies. This represents a significant six-rung ascent, marking a notable improvement since the nation’s inaugural inclusion in the ranking back in 1997, as announced by the Ministry of Economy and Finance on Thursday.
These latest findings position South Korea uniquely within the “30-50 club” – economies boasting a per capita income exceeding $30,000 and a population over 50 million. Among this elite group, South Korea trails only the United States, which ranked 10th globally. Following Korea at 21st are Germany (23rd), the United Kingdom (24th), and Japan (30th).
The Ministry attributed this substantial rise in global competitiveness primarily to enhanced performance in business efficiency and infrastructure. South Korea’s ranking in business efficiency surged 10 places to 34th, while its infrastructure ranking advanced by six positions, reaching 15th overall.
Remarkably, all five subcategories under business efficiency showed improvement year-over-year. Productivity and efficiency climbed to 34th from 45th; the labor market improved from 53rd to 45th; finance rose to 29th from 33rd; management practices moved to 49th from 55th; and attitudes and values saw a significant leap to 18th from 33rd.
Similarly, infrastructure exhibited broad-based enhancements across most areas. Basic infrastructure improved from 35th to 28th, technological infrastructure advanced from 39th to 27th, health and environment progressed from 32nd to 29th, and education moved up from 27th to 21st. Notably, Korea sustained its robust standing in scientific infrastructure, retaining its second-place position globally.
However, this impressive overall advancement was somewhat tempered by a weaker economic performance. South Korea’s ranking in the economic performance category slipped to 14th from 11th. This decline was influenced by lower scores in domestic economy, employment, and prices, which collectively overshadowed modest gains observed in international trade and investment. According to the Ministry, annual growth indicators were impacted by a subdued performance in the first half of 2025, despite a subsequent rebound in the latter half of the year.
The moderated economic performance was directly linked to several weaker growth indicators. The Ministry reported South Korea’s annual real GDP growth at 1.1 percent in 2025, with sluggish first-half conditions offsetting a stronger recovery later in the year. Consequently, the domestic economy category fell from eighth to 10th, employment declined from fifth to seventh, and prices dropped significantly from 30th to 40th.
Government efficiency maintained its position at 31st. While areas such as tax policy, institutional framework, and societal framework saw improvements, public finance and business legislation experienced declines within this category.
The IMD World Competitiveness Ranking comprehensively evaluates economies based on four primary factors, 20 subfactors, and 341 detailed indicators. This rigorous assessment incorporates both statistical data and executive opinion surveys, serving as a crucial global benchmark for understanding how effectively economies foster business activity and cultivate long-term competitiveness.
