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US Remains World's Most Competitive Economy

By Ulrika Lomas,, Brussels

13 October 2008

The United States tops the overall ranking in the World Economic Forum's latest Global Competitiveness Report, covering the year 2008-2009.

The new report, released on October 8, puts Switzerland in second position, followed by Denmark, Sweden and Singapore. European economies continue to prevail in the top 10 with Finland, Germany and the Netherlands following suit. The United Kingdom, while remaining very competitive, has dropped by three places and out of the top 10, mainly attributable to a weakening of its financial markets.

The People’s Republic of China continues to lead the way among large developing economies, improving by four places this year and joining the top 30. All of the BRIC (Brazil, Russia, India, China) economies figure in the top half of the ranking, with China followed by India, Russia and Brazil.

Several Asian economies perform strongly with Japan, Hong Kong SAR, Republic of Korea and Taiwan in the top 20. In Latin America, Chile is the highest ranked country, followed by Panama, Costa Rica and Mexico.

A number of countries in the Middle East and North Africa region are in the upper half of the rankings, led by Israel, Qatar, Saudi Arabia, United Arab Emirates, Kuwait and Tunisia, with particular improvements noted in the Gulf States since last year. In sub-Saharan Africa, South Africa, Botswana and Mauritius feature in the top half of the rankings, with several countries from the region measurably improving their competitiveness.

“Rising food and energy prices, a major international financial crisis and the related slowdown in the world’s leading economies, are confronting policy-makers with new economic management challenges. Today’s volatility underscores the importance of a competitiveness-supporting economic environment that can help national economies to weather these types of shocks in order to ensure solid economic performance going into the future,” said Xavier Sala-i-Martin, Professor of Economics, Columbia University, USA, and co-author of the report.

The Global Competitiveness Report’s main competitiveness ranking is the Global Competitiveness Index (GCI), developed for the Swiss-based WEF by Sala-i-Martin and originally introduced in 2004. The GCI is based on 12 pillars of competitiveness, providing a comprehensive picture of the competitiveness landscape in countries around the world at all stages of development. The pillars include: Institutions, Infrastructure, Macroeconomic Stability, Health and Primary Education, Higher Education and Training, Goods Market Efficiency, Labour Market Efficiency, Financial Market Sophistication, Technological Readiness, Market Size, Business Sophistication and Innovation.

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 Partner Institutes (leading research institutes and business organizations) in the countries covered by the report. This year, over 12,000 business leaders were polled in a record 134 global economies. 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.

“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. 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 2008-2009 offers policy-makers and business leaders an important tool in the formulation of improved economic policies and institutional reforms,” noted Klaus Schwab, Founder and Executive Chairman of the World Economic Forum.

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