May 23, 2014 08:17
The United States ranks as the most competitive country in the world in a survey of 60 countries by IMD, a leading global business school in Switzerland. The survey finds Europe is recovering some of its competitive edge, while emerging economies are struggling to hold their own.
Authors of the report say the United States owes its top position to its resilient economy, better employment numbers, and dominance in technology and infrastructure. It is followed in the competitiveness ranking by three small economies -- Switzerland, Singapore, and Hong Kong -- all of which prosper from exports, business efficiency and innovation.
The report finds Europe is doing better than last year, thanks to its gradual economic recovery, but most of the big emerging markets are sliding in the rankings. It says the so-called BRIC countries -- Brazil, Russia, India and China -- are losing out in the competitiveness race as economic growth and foreign investment slow and infrastructure remains inadequate.
China, which is widely expected to supplant the United States as the world's economic superpower, has fallen two places since last year and now ranks 23rd on the competitiveness index.
Director of the IMD World Competitiveness Center, Arturo Bris, says China does not perform well in terms of competitiveness because of its lack of good institutional development.
"What we see in China and in BRIC countries in general -- Brazil, Russia, India -- is that economic growth has happened too fast and has not happened in parallel with the necessary reform in the institutional environment. The business regulation, economic institutions and financial markets, business principles and values, corruption, sustainability -- in that regard, at some point, economic growth becomes unsustainable," said Bris.
Bris says Brazil is in big trouble. He says last year's huge economic growth has translated into social unrest because the country's prosperity has not trickled down to the average citizen. Brazil this year has fallen three places to number 54 in the rankings.
The IMD competitiveness rankings are based on four factors: economic performance, government efficiency, business efficiency and infrastructure. The report says there is no relationship between democracy and competitiveness, though the likelihood of a good government is higher in a democracy.
It says good leadership is a more important determinant. It notes that Singapore and the United Arab Emirates -- two authoritarian governments with strong leaders -- figure in the top 10.
There is a noticeable absence of developing countries in the survey. In fact, the only African country included is South Africa, which places 52 in the rankings. Bris says IMD believes African countries are very competitive and would like to include them in the survey. But, he says, IMD can only work with countries that are able to provide high-quality data and access to business executives who can provide information about the country.
"Our mission as a center is to help countries develop and create, generate prosperity. And we can help Nigeria or Kenya much more than we can help the United States. So it is in our mission to just incorporate more and more emerging markets and emerging countries into the rankings," he said.
Russia has moved up four places from last year's ranking to number 38. Ukraine remains steady in 49th position. However, IMD chief Bris notes this year's rankings are based on data collected before the current destabilizing events in Ukraine erupted.
He says volatility and lack of social cohesion are bad for business, and that he expects this will be reflected in next year's competitiveness rankings.
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