Econintersect: The U.S. slipped to seventh place in the ranking of economic competitiveness in the 2012 ranking published by the WEF (World Economic Forum). Last year the U.S. ranked fifth. The current result marked the fourth year of decline for the country that used to rule the competitiveness roost. The Global Competitiveness Report 2012-2013 assesses the competitiveness landscape of 144 economies, providing insight into the drivers of their productivity and prosperity. For the fourth year in a row Switzerland topped the list. Six of the top ten countries are in Europe, three in Asia and one in the Americas.
The U.S. ranks behind sixth place Germany and just ahead of the UK, Hong Kong and Japan which round out the top ten. Hong Kong was new to the top ten, up from #11 last year. Denmark fell from the top ten, #8 in 2011 to #12 this year. Some other placements are Canada (14), Australia (20), France (21), China (29), Turkey (43), Brazil (48) and India (59). The full list of 144 can be viewed here. The top ten:
All of the BRICS except Brazil, slipped slightly back in the rankings:
- China: 26 --> 29
- Brazil: 53 --> 48
- South Africa: 50 --> 52
- India: 56 --> 59
- Russia: 66 --> 67
The summary discussion for the U.S. from the report (emphasis added by Econintersect):
The United States continues the decline that began a few years ago, falling two more positions to take 7th place this year. Although many structural features continue to make its economy extremely productive, a number of escalating and unaddressed weaknesses have lowered the US ranking in recent years. US companies are highly sophisticated and innovative, supported by an excellent university system that collaborates admirably with the business sector in R&D. Combined with flexible labor markets and the scale opportunities afforded by the sheer size of its domestic economy—the largest in the world by far—these qualities continue to make the United States very competitive.
On the other hand, some weaknesses in particular areas have deepened since past assessments. The business community continues to be critical toward public and private institutions (41st). In particular, its trust in politicians is not strong (54th), perhaps not surprising in light of recent political disputes that threaten to push the country back into recession through automatic spending cuts. Business leaders also remain concerned about the government’s ability to maintain arms-length relationships with the private sector (59th), and consider that the government spends its resources relatively wastefully (76th). A lack of macroeconomic stability continues to be the country’s greatest area of weakness (111th, down from 90th last year). On a more positive note, measures of financial market development continue to indicate a recovery, improving from 31st two years ago to 16th this year in that pillar, thanks to the rapid intervention that forced the deleveraging of the banking system from its toxic assets following the financial crisis.
Editor's note: The negatives identified by the WEF report (highlighted by Econintersect) are factors of attitude and the one positive resulted from a massive bailout of banking by the government. If we accept the important factors to be those identified by the WEF, one conclusion is that the USA needs a good old fashioned attitude adjustment.
Here is the full press release from the WEF:
Persisting Divides in Global Competitiveness as Switzerland, Singapore and Finland Top Competitiveness Rankings in 2012
Oliver Cann, Associate Director, Media, Tel.: +41 (0)79 799 3405 firstname.lastname@example.org
- Competitiveness gap widening among European countries
- US remains world’s innovation powerhouse despite decline in overall ranking
- People’s Republic of China most competitive among large emerging markets; India, Russia fall
- Download the full report profiling 144 economies, highlights, rankings and more at http://www.weforum.org/gcr
- Watch the video interviews on the results of the report
Geneva, Switzerland, 5 September 2012 – Switzerland, for the fourth consecutive year, tops the overall rankings in The Global Competitiveness Report 2012-2013, released today by the World Economic Forum. Singapore remains in second position and Finland in third position, overtaking Sweden (4th). These and other Northern and Western European countries dominate the top 10 with the Netherlands (5th), Germany (6th) and United Kingdom (8th). The United States (7th), Hong Kong (9th) and Japan (10th) complete the ranking of the top 10 most competitive economies.
The large emerging market economies (BRICS) display different performances. Despite a slight decline in the rankings of three places, the People’s Republic of China (29th) continues to lead the group. Of the others, only Brazil (48th) moves up this year, with South Africa (52nd), India (59th) and Russia (67th) experiencing small declines in rankings.Despite growing its overall competitiveness score, the United States continues its decline for the fourth year in a row, falling two more places to seventh position. In addition to the burgeoning macroeconomic vulnerabilities, some aspects of the country’s institutional environment continue to raise concern among business leaders, particularly the low public trust in politicians and a perceived lack of government efficiency. On a more positive note, the country still remains a global innovation powerhouse and its markets work efficiently.The report indicates that Switzerland and countries in Northern Europe have been consolidating their strong competitiveness positions since the financial and economic downturn in 2008. On the other hand, countries in Southern Europe, i.e. Portugal (49th), Spain (36th), Italy (42nd) and particularly Greece (96th) continue to suffer from competitiveness weaknesses in terms of macroeconomic imbalances, poor access to financing, rigid labour markets and an innovation deficit.
Behind Singapore, several Asian economies are performing strongly, with Hong Kong SAR (9th), Japan (10th), Taiwan, China (13th) and the Republic of Korea (19th) all in the top 20.
In the Middle East and North Africa, Qatar (11th) leads the region while Saudi Arabia remains among the top 20 (18th). The United Arab Emirates (24th) improves its performance while Kuwait (37th) slightly declines. Morocco (70th) and Jordan (63rd) improve slightly. In sub-Saharan Africa, South Africa (52nd) and Mauritius (54th) feature in the top half of the rankings. However, most countries in the region continue to require efforts across the board to improve their competitiveness.
In Latin America, Chile (33rd) retains the lead and a number of countries see their competitiveness improve, such as Panama (40th), Brazil (48th), Mexico (53rd) and Peru (61st). Read more highlights of the report.
“Persisting divides in competitiveness across regions and within regions, particularly in Europe, are at the origin of the turbulence we are experiencing today, and this is jeopardizing our future prosperity.” said Klaus Schwab, Founder and Executive Chairman, World Economic Forum. “We urge governments to act decisively by adopting long-term measures to enhance competitiveness and return the world to a sustainable growth path.”
Xavier Sala-i-Martin, Professor of Economics, Columbia University, USA, said: “The Global Competitiveness Index provides a window on the long-term trends that are shaping the competitiveness of the world’s economies. In this light, we believe it offers useful insight into the key areas where countries must act if they are to optimize the productivity that will determine their economic future.”
- Global Competitiveness Report 2012-2013 (World Economic Forum)
- The Global Competitiveness Report 2011-2012 (World Economic Report)
- Persisting Divides in Global Competitiveness as Switzerland, Singapore and Finland Top Competitiveness Rankings in 2012 (Press Release, World Economic Forum, 05 September 2012)