IMD International

Employee training can make countries more competitive

IMD Professor Reacts: Arturo Bris on how investment in talent development influences competitiveness

November 4, 2014

With economic conditions still challenging, many firms are considering whether to tighten their budgets and cut employee training. This could be a mistake. While it may seem counter-intuitive to invest in talent development while times are tough, our research at the IMD World Competitiveness Center shows that this investment contributes substantially to making companies and their host countries more competitive.

Our findings show that more training not only results in improved performance and productivity for companies; it also allows them to nurture innovation and to offer better products and services. Ultimately, these corporate gains influence the competitiveness of a country.

Data from the IMD World Competitiveness Yearbook from 2009-14 show a strong relationship in many countries between employee training and national competitiveness. Australia had high employee training scores in 2009 but experienced a drop in 2014, moving from 16th to 35th place on that criterion. Over the same period, Australia's overall competitiveness ranking dropped from 5th to 17th. Mexico rose from 50th in 2009 to 32nd place in 2013 on the employee training measure, before dropping to 41st place in 2014. In the overall ranking the pattern was similar; Mexico rose from 47th spot (2009) to 32nd (2013) and then dropped to 41st. During the same period Germany moved from 9th to 2nd in employee training while rising from 16th to 6th in the overall ranking.

In some other countries, however, the relationship between employee training and competitiveness seems limited. In 2009-14, Korea experienced a large drop in its employee training rank, going from 6th to 22nd, while its overall ranking fell much more modestly (from 23rd to 26th place). Similarly, France moved from 24th to 40th place in employee training but only fell from 24th to 27th in the overall competitiveness ranking. New Zealand, meanwhile, dropped from 26th to 50th in employee training while remaining in 20th spot in competitiveness. The movement in these countries' overall rankings reflect numerous other criteria, such as public policy or infrastructure.

Arturo Bris is Professor of Finance at IMD and directs the IMD World Competitiveness Center. He will lead a session on world competitiveness at IMD's Orchestrating Winning Performance (OWP) program in Singapore, which runs from November 17-22.

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