Last year the country’s ranking was 53 out of 148.
The index looked at 12 “pillars” – institutions, infrastructure, macroeconomic environment, health and primary education, higher education and training, goods market efficiency, labour market efficiency, financial market development, technology readiness, market size, business sophistication, and innovation.
In higher education and training, South Africa ranked last in the quality of maths and science education.
The country was 140 out of 144 for the quality of its education system.
In labour market efficiency, it ranked last in co-operation in labour-employer relations and 143 out of 144 for hiring and firing practices.
However, in some areas the country did well.
The country ranked number one for the strength of auditing and reporting standards. In financial markets development, it came first in the regulation of the securities exchange.
South Africa ranked low in health and education, especially in the quality of primary education, where it ranked 133 out of 144; tuberculosis cases (143); business impact of TB (136); HIV prevalence (140); and the impact of HIV/Aids on business (136).
Professional services firm Grant Thornton said auditing excellence was not enough for foreign investment and South Africa needed to fix its education, health, and labour sectors.
“While it’s heartening that we have managed to retain the top spot world-wide in this area for the past five consecutive years, the… report once again drives home the enormous dichotomy hampering the competitiveness of our nation,” the company’s Johannesburg chief executive Andrew Hannington said in a statement on Tuesday.
“These failings discourage foreign direct investment and hinder South Africa’s long-term economic growth and stability.”
He said foreign investors had no interest in countries with uneducated, unproductive workforces and unreliable labour relations.
“Unfortunately these negatives are much more damaging to the country than the advantages of our superior auditing and reporting standards.”