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Study shows U.S. is less competitive in global economy

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A recent World Economic Forum study shows the U.S. is less competitive in the global economy as a result of large deficits and a weakened financial system, according to The Washington Post. The U.S. fell to fourth in the rankings this year behind Switzerland, Sweden and Singapore after slipping from first to second the previous year.

The study includes statistical measures and a survey of business owners to compare countries. U.S. entrepreneurs cited government regulation and access to credit as major concerns.

However, government debt and the overall economic outlook led to the U.S.' fall in the rankings. Regarding a country's competitiveness, government debt limits a country's ability to respond to crises or invest in activities that could boost future productivity and also may lead to higher interest rates.

The study also examined factors such as the strength of institutions and laws, quality of infrastructure, public health and education, and levels of technology and innovation. The U.S. scored high regarding efficiency of labor markets, innovation and higher education but ranked 55th in the strength of corporate reporting requirements; 84th in the business costs of crime and violence; and 125th in the business costs of terrorism.

Many countries—including Greece, Ireland and Spain—tumbled in the competitiveness rankings this year as a result of the global economic crisis. Other countries jumped significantly as their governments kept debt under control and invested in infrastructure and institutional reform; Indonesia went from 54th to 44th and Vietnam went from 75th to 59th. China—ranked 27th—was among the most competitive of the developing countries.

Because the study partly is based on a survey of business owners, results can be affected by a country's general mood or outlook.


9/9/2010

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