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GENEVA, Sept 26: The United States fell to sixth place in the World Economic Forum’s global competitiveness rankings for 2006, ceding the top place to Switzerland, as macroeconomic concerns eroded prospects for the world’s largest economy.
In a report released on Tuesday, the forum said Washington’s huge defense and homeland security spending commitments, plans for further tax cuts and long-term potential costs from health care and pensions were creating worrisome fiscal strains.
“With a low savings rate, record-high current account deficits and a worsening of the US net debtor position, there is a non-negligible risk to both the country’s overall competitiveness and, given the relative size of the US economy, the future of the global economy,” it said.
While stressing that US dominance in education and innovation should keep the country among the world’s most competitive “for the foreseeable future,” the report said economic concerns had made other countries more attractive for business leaders.
US Sen. Lindsey Graham, a South Carolina Republican, said in Washington that the decline in America’s competitiveness would accelerate unless the country made reforms.
“We need to clean up our own backyard to make sure our economic and legal policies welcome capital instead of drive it away,” he said.
CHALLENGE TO US: Augusto Lopez-Claros, chief economist of the World Economic Forum, said that unless the United States acted it “could allow other countries in a highly competitive global economy to challenge the US’s privileged position.”
Switzerland was deemed the most competitive economy in 2006, followed by Finland, Sweden, Denmark and Singapore. After the United States, which had topped the 2005 index, Japan, Germany, the Netherlands and Britain rounded out the top 10.
The Geneva-based group Forum said that Switzerland’s well developed infrastructure, plentiful scientific research and intellectual property safeguards helped vault the small Alpine country into the index’s leading position.
RUSSIA, CHINA SLIP: Russia slipped nine places for a 62nd-place ranking this year, largely due to private sector misgivings about the independence of the country’s judiciary, according to the report based on surveys of more than 11,000 business leaders worldwide.
“Legal redress is Russia is neither expeditious, transparent nor inexpensive, unlike in the world’s most competitive economies,” it said. “Partly because of this, the property rights regime is extremely poor and worsening.”
China’s ranking also fell — to 54 from last year’s 48.
India gained two places to rank 43rd in the World Economic Forum ranking, with persistent poverty, weak health infrastructure and a large public sector deficit offsetting advances in technological services.—Reuters
