“The United States confirms its position as the most competitive economy in the world," stated Xavier Sala-i-Martin, Professor of Economics at Columbia University, and Co-Editor of the Report. "The efficiency of the country’s markets, the sophistication of its business community, the impressive capacity for technological innovation that exists within a first-rate system of universities and research centres, all contribute to making the United States a highly competitive economy."

However with regard the US economy, Sala-i-Martin noted that some weaknesses, particularly related to macroeconomic imbalances, continue to present a risk to the country’s overall competitiveness potential, and to the global economy as a whole.

"This danger has most recently been demonstrated by the fallout and contagion caused by the country’s sub-prime mortgage crisis and the ensuing global credit crunch,” he observed.

Switzerland was followed in second place by Denmark, Sweden, Germany, Finland and Singapore. The top slots were completed by Finland, Japan, the United Kingdom and the Netherlands.

Chile is the highest ranked country in Latin America, followed by Mexico and Costa Rica. China and India continue to lead the way among large developing economies.

Several countries in the Middle East and North Africa region are in the upper half of the rankings, led by Israel, Kuwait, Qatar, Tunisia, Saudi Arabia and the United Arab Emirates.

In sub-Saharan Africa, only South Africa and Mauritius feature in the top half of the rankings, with several countries from the region positioned at the very bottom.

The rankings are calculated from both publicly available data and the Executive Opinion Survey, a comprehensive annual survey conducted by the World Economic Forum together with its network of leading research institutes and business organizations in the countries covered by the report.

This year, over 11,000 business leaders were polled in a record 131 countries. The survey is designed to capture a broad range of factors affecting an economy’s business climate. The report also includes comprehensive listings of the main strengths and weaknesses of countries, making it possible to identify key priorities for policy reform.

“Economic policy, especially at the microeconomic level, needs to set priorities that reflect the most important constraints to competitiveness in each country. The GCR enables countries to move beyond abstract theoretical policy debates and identify the specific tasks ahead of them,” explained Michael E. Porter, Harvard Business School Professor, and Co-Director of the Report.

“In an uncertain global financial environment it is more important than ever for countries to put into place the fundamentals underpinning economic growth and development," commented Klaus Schwab, Founder and Executive Chairman of the World Economic Forum. "The World Economic Forum has for many years played a facilitating role in this process by providing detailed assessments of the productive potential of nations worldwide. The Global Competitiveness Report 2007-2008 offers policy-makers and business leaders an important tool in the formulation of improved economic policies and institutional reforms."

The GCI is based on 12 pillars of competitiveness: Institutions, Infrastructure, Macroeconomic Stability, Health and Primary Education, Higher Education and Training, Goods Market Efficiency, Labor Market Efficiency, Financial Market Sophistication, Technological Readiness, Market Size, Business Sophistication and Innovation.

A second part of the Report provides a more detailed examination of the microeconomic aspects of competitiveness, presented in the Business Competitiveness Index (BCI) led by Professor Porter. Countries that do well on the GCI also tend to do well on the BCI but there are some important differences.

“Many countries have achieved progress by opening up to the world economy, stabilizing macroeconomic policies and removing internal barriers to competition. Our findings reveal the need to build underlying microeconomic competitiveness to translate these gains into sustained prosperity. If improvements in the business environment and company sophistication fail to materialize and they often require significant shifts in company and country nations expose themselves to declining competitiveness and are vulnerable to economic and social risks,” announced Professor Porter.

The BCI found many European countries, especially Switzerland, Norway and Spain, to have wages much above the level supported by their competitiveness.