World Economic Forum Says U.S. Back On Top
Wednesday, October 31st 2007, 7:12 am
By: News On 6
GENEVA (AP) _ The United States has regained its status as the world's most competitive economy thanks to strong innovation and excellent universities, according to a survey released Wednesday by the World Economic Forum.
The U.S. rebounded from sixth place last year to knock Switzerland from the top spot in the ``global competitiveness index.'' The Swiss were second this year, followed by Denmark, Sweden, Germany and Finland.
The study by the Geneva-based World Economic Forum said the U.S. was boosted by its close cooperation between universities and business on research and development, its high intellectual property protection, and its efficient use of employees and investment.
But increasing public indebtedness in the U.S. threatens to hamper the country's growth, the study said.
``This danger has most recently been demonstrated by the fallout and contagion caused by the country's subprime mortgage crisis and the ensuing global credit crunch,'' said Xavier Sala-i-Martin, a professor of economics at Columbia University and one of the authors of the survey.
Sala-i-Martin said the weaknesses ``present a risk to the country's overall competitiveness potential and to the global economy as a whole.''
The aim of the survey is to examine the factors that can affect a country's business environment and development. Included are judicial independence, government favoritism and corruption.
Switzerland was credited with an excellent capacity for innovation, a sophisticated business culture, outstanding scientific research institutions, and strong intellectual property protection.
Denmark and Sweden were ranked third and fourth respectively, followed by Germany and Finland.
The Nordic countries _ traditionally strong in the survey _ were praised for their budget surpluses and very low levels of public indebtedness.
Germany's good performance is largely due to its high-quality infrastructure and the efficiency of its goods and financial markets, according to the survey. The same positive elements also boosted Britain, which came in ninth.
More than 11,000 business leaders in 131 countries took part in the survey, which ranked Singapore seventh, followed by Japan. The Netherlands came in 10th.
China and India, two emerging economies, were in the middle of the 131-nation list. China improved to 34th, from 54th last year. Its competitiveness was based mainly on its large market and a stable economy with low inflation and high savings.
India's 48th place ranking was mainly attributed to the high availability of scientists and engineers and good quality of scientific research institutions in an economy with a large market size.
At the bottom of the list were countries primarily in sub-Saharan Africa, such as Mozambique, Zimbabwe, Burundi and Chad.
As part of the weak points in the U.S., the survey listed insufficient judicial independence and high security costs for businesses. It also said the business community was particularly concerned about government favoritism in dealings with companies.
But the greatest flaw was economic instability, according to the survey.
``The United States has built up large macroeconomic imbalances over recent years, with repeated fiscal deficits leading to rising levels of public indebtedness,'' it said.
High budget and trade deficits were also cited among the key factors which made the U.S. fall to sixth in last year's poll. The U.S. was top-ranked in 2005.