After four long years stuck at number 7 in the World Economic Forum’s economic competitiveness rankings (generally viewed as the most comprehensive assessment of relative economic health), the United States has rocketed past its competitors (well, at least Sweden and Hong Kong…) to the glorious distinction of being the fifth best in the world (sort of like how losing in the Olympics doesn’t actually make you a “loser” – if you want to look on the bright side, that is). Plus there are 148 countries evaluated in the WEF’s Global Competitiveness Report which defines competitiveness as the “institutions, policies, and factors that determine the level of productivity of a country.” Number five isn’t THAT bad…
According to Dr. Margareta Drzeniek-Hanouz, lead economist at the WEF’s Global Competitiveness and Benchmarking Network, “competitiveness is not so much about countries competing in the global marketplace, but rather about the factors — politicians, institutions — that countries put into place to raise productivity and thereby grow.” In the case of the United States, Drzeniek-Hanouz highlighted financial market efficiency, labor market efficiency and innovation as factors that make the country globally competitive.
Regardless, despite having our asses kicked by Germany (#4), Finland (#3), Singapore (#2) and the perrenial big winner Switzerland, we at least blew the UK out of the water at a pathetic #10 (and to think they once ruled most of the world… losers).
The most striking gaps separating us from nations like Switzerland and Singapore aren’t especially surprising: significantly lower per capita income, poor educational performance at the primary, secondary and vocational levels and overall income inequality (although I’d question that statistic slightly with regard to Singapore due to the number of exceedingly low paid guest-workers on which wealthy SIngporeans happily rely to do much of their manual labor.
Unfortunately, of course, given our currently paralyzed governement, it’s going to take a lot of legislative/regulatory will-power (and serious private sector innovation) for the US to stay at #5 let alone move up the scale. But at a time when all the domestic busniness news seems to be about corruption at JPMorgan and a looming goverment shutdown, it’s nice to find at least one ray of proverbial financial sunshine. [Note: we’re still only #7 in terms of GDP per capita, but who’s counting…]
One thing is clear, despite America’s enormous advantages when it comes to long-term growth potential, technological dynamism, defense infrastructure and – perhaps most importantly – immigration-led population growth, even relatively simple reforms (i.e. changing the way in which work visas are granted to incentivize higher-skilled workers) could dramatically improve what SHOULD be the world’s #1 economic powerhouse.