We’re the Biggest, but are we the Best? U.S. Global Competitiveness falls from 5th to 7th place

According to the newly released 2012 Global Competitiveness ranking by the World Economic Forum (WEF) the United States has fallen from 5th place to 7th place of 144 economies. This marks the fourth year of decline for the U.S., which last year fell from 4th to 5th place. The Geneva-based WEF cites the GDP to debt ratio, concerns over January’s upcoming “fiscal cliff”, institutional mistrust by the business community, and a lack of macroeconomic stability as the major reasons for the decline. Additionally, the nation’s 2011 credit downgrade by Standard & Poor from an AAA to AA+ is seen as a reflection of national struggles with these same issues which have also decreased its global competitiveness.

Jennifer Blanke, Chief Economist of the WEF, sought to explain in more detail this ranking, stating that there is “continuing concern about the macro-economic environment, continuing debt levels – the inability to get the spending under control and really political deadlock about how to even deal with this issue. And, this is leading to concern about political institutions in general.” Despite these causes of decreasing U.S. stature, economists do highlight the high score of the United States in innovation and productivity. According to the report, the United States is still considered a premier model for other world economies in these areas and has the potential to improve in all other sectors.

The WEF’s Global Competitiveness Report has been conducted annually for over 30 years and ranks national economies based on 12 influential pillars. Some of these factors include measuring and comparing infrastructure, innovation, technological readiness, higher education and training, and financial market development. Recently adjusted for social and environmental sustainability, the report created a measurement for the ease of citizens maximizing their potential to contribute to economic prosperity and a measurement for overall institutional efficiency in the management of resources.

Who ranks above and below the United States? Western Europe dominates the top 10: Switzerland, Singapore, and Finland round out the top three ranks, followed by Sweden, the Netherlands, and Germany, respectively. Other rankings of interest are Japan in 10th, China in 26th, and the rest of the BRIC emerging economies coming in with Brazil in 53rd, India in 55th, and Russia trailing in 66th place. Greece, weakening still, now ranks at 96th, and Yemen remains in last place at 144th.

As the United States remains the world’s largest economy we can hardly count out America as a major economic heavyweight and innovator. Still, the slip is seen by some as a serious concern, especially in tangent with the potential fiscal cliff coming in January. No matter who is elected in November, Washington certainly has economic policy changes to make to regain its stature as a top global competitor in the eyes of the World Economic Forum.

Posted by: Sophia Higgins

Sources: CNBC, World Economic Forum, the Hill, Outlook Series

Photo Source: no name @ Gates Foundation photostream courtesy of Flickr user Gates Foundation

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One Response to We’re the Biggest, but are we the Best? U.S. Global Competitiveness falls from 5th to 7th place

  1. Pingback: STEM Education: a Federal Priority for the New Year « America and the Global Economy

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