"The progress is an indication of the resilient nature of the South African economy despite the impact of the global economic and financial crises last year," government agency Productivity SA said in a statement.In 2008 South Africa was ranked 53rd and in 2009 it moved higher to 48th position.
This year the country moved four notches higher to be ranked at 44th out of a total 58 countries that were selected.
"South Africa's strong competitiveness is being linked to the increased level of portfolio investment assets and direct investment stocks moving inward, as investors divert their investments to emerging markets that were not too exposed to the financial crises in a bid to protect their investments," the executive manager of value chain competitiveness at Productivity SA, Sello Mosai, said.
The improvement was also due to better labour market flexibility, an improved current account balance, a better inflation outlook and better cost of living index.
The results appear in the World Competitiveness Yearbook 2010, published by the Switzerland-based Institute of Management Development (IMD) with information provided through Productivity SA.
The IMD Yearbook rates the ability of 58 industrialised and emerging economies' "to create and maintain an environment that sustains the competitiveness of enterprises".
Country data was evaluated this year through 327 distinct criteria, grouped into four competitiveness factors: government efficiency, business efficiency, economic performance, and infrastructure.
Despite the improvement in South Africa 's economic competitiveness, Productivity SA cautioned that South Africa declined further in employment creation, exports and gross domestic product in real terms -"although this is a result of the effects of the global recession in the second and third quarter of 2009".
There was also a reduction in business efficiency from 30th to 31st position.
"Business efficiency was the only competitiveness factor where South Africa performed poorly as compared to the previous year."
It was extremely encouraging to see that South Africa performed well in the other three competitiveness factors, Mosai said.
"Notably South Africa's performance strengthened in government efficiency where we improved five places from 26th to 21st and in infrastructure, where there was improvement three places from 54th to 51st amongst the 58 countries sampled."
This showed that the South African government's investment in energy, transportation and infrastructure development through its industrial and economic policy interventions was making progress.
Comparing South Africa's overall competitive ranking with the BRIC (Brazil, Russia, India and China) countries, South Africa performed better than Russia (51st position), but poorer than China (18th), India (31st) and Brazil (38th).
Amongst other countries, South Africa performed better than Colombia (45), Mexico (47), Greece (46) and Argentina (55) but performed poorly as compared to Australia (5), Malaysia (10), New Zealand (20) and Chile (28).
Chairman of Productivity SA's board Alwyn Nel, said South Africa could improve on and even better its competitiveness position next year if there was improved national and international demand for South African products, a stable economic environment, reduced inflationary pressures, the promotion of public and private investment to build capacity, and imminent competition in key industries.
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Steuart has done some 500 talks on South Africa's progress since 1994 and SA's prospects for the future' 
