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Switzerland #1 in Global Competitiveness Report; U.S. Drops Two Spots to 7th

This continues the U.S. decline in the rankings for the fourth year in a row, with business leaders continuing to raise concerns about a lack of government efficiency among other macroeconomic issues.

Area Development Online Research Desk (September 2012)
The World Economic Forum's recently released Global Competitiveness Report 2012-2013 indicates that global growth remains historically low for the second consecutive year, with major centers of economic activity - particularly large emerging economies and key advanced economies - expected to slow further in 2012-2013, confirming the belief that the global economy is troubled by a slow and weak recovery. Additionally, growth remains unequally distributed. Emerging and developing countries are growing faster than advanced economies, steadily closing the income gap.

This year's report features a record number of 144 economies, with a detailed profile for each included in the study as well as an extensive section of data tables with global rankings covering over 100 indicators.

For the fourth year in a row, Switzerland tops the overall rankings in the World Economic Forum's report. Singapore remains in second position. 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.

Finland moves up to the number-three spot, overtaking Sweden (4th). It appears that northern and western European countries dominate the top-10, with the Netherlands ranking 5th (up two spots this year), Germany holding on to its 6th place ranking, and the United Kingdom moving up two places to 8th. 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.

Dropping two spots to 7th was the United States (7th). This continues the U.S. decline in the rankings for the fourth year in a row, with business leaders continuing to raise concerns about a lack of government efficiency among other macroeconomic issues. Meanwhile, Hong Kong advanced two positions to 9th, pushing Japan into 10th place.

Despite a slight decline in the rankings of three places, the People's Republic of China (29th) continues to lead the large emerging market economies (BRICS). Of the others in that group, only Brazil (48th) moves up this year, with India (59th) and Russia (67th) experiencing small declines in the rankings.

Unlike the northern European nations, the 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 labor markets, and an innovation deficit.

In the Middle East and North Africa, Qatar (11th) leads the region, while Saudi Arabia remains among the top 20 (18th). 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). Mexico has actually seen its position improve dramatically in the last two years: it was 58th in 2011 and 66 in 2010.

"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 of the 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, at Columbia University, adds, "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."
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