If you listened closely on Wednesday morning at about 10am, when the World Economic Forum released its Global Competitiveness Index, you might have heard the sound of large quantities of air being gulped down as chests across the country filled with pride.

The report showed New Zealand is ranked as the 18th most competitive economy in the world, up five places on last year, but more importantly – at least from a patriotic point of view - three places ahead of Australia, which dropped out of the top 20 for the first time ever.

Coming hot on the heels of the Bledisloe Cup drubbing, it reinforced the view that it’s a fine time to be living in Aotearoa (which this researcher wholeheartedly agrees with).

The report shows Kiwis are getting the basics right with our institutions; health and education systems all ranked in the top 10 globally. Our policy settings are also delivering dividends with the economy highly ranked for financial market development as well as goods and labour market efficiency.

Meanwhile, Australia’s softer performance was largely attributed to the inflexibility of its labour market, which was ranked 137th in the world for the rigidity of its hiring and firing practices (out of a possible 148), as well as the regulatory burden placed on businesses (128th globally).

But before we congratulate ourselves too heartily for showing our brethren across the Tasman just how an economy should be managed, it’s also worth checking where our warts are.

We ranked fairly low down for macroeconomic environment and market size (43rd and 62nd respectively), although it’s hard to see how we could alter those factors.

New Zealand is also well behind Australia on infrastructure (27th versus 18th) and technological readiness (24th versus 12th).

Indeed, when you look at business sophistication and innovation factors, we’ve made zero headway in the past 12 months (ranking 27th in the world on a combined basis) despite the fact it’s widely accepted that this is where we need to be making up ground.

Right now economic growth is jogging along at a 2.5 percent pace, predominantly driven by dairy exports to Asia and the Canterbury rebuild. However, the latter will fade and you only have to look at Australia’s post-resources investment struggles to appreciate the dangers of overspecialising.

So, while New Zealand’s position in the WEF rankings is something to be proud of, if real value is to be extracted from the report it should be used as a rallying call to further improve our competitiveness.