U.S. falls to 6th in world competitiveness (China is #54)

CNN ^ | 9/26/06 | Mikey_1962

[Mikey_1962]

GENEVA (Reuters) -- The United States fell to sixth place in the World Economic Forum's 2006 global competitiveness rankings, ceding the top place to Switzerland as macroeconomic concerns eroded prospects for the world's largest economy.

In a report released Tuesday, the World Economic Forum said Washington's huge defense and homeland security spending commitments, plans to lower taxes further, and long-term potential costs from health care and pensions were creating worrisome fiscal strains.

Switzerland grabs top spot in World Economic Forum's global rankings. U.S. sinks to 6th.

"With a low savings rate, record-high current account deficits and a worsening of the U.S. net debtor position, there is a non-negligible risk to both the country's overall competitiveness and, given the relative size of the U.S. economy, the future of the global economy," it said.

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 World Economic Forum said Switzerland's well developed infrastructure, plentiful scientific research, intellectual property protection and sophisticated business culture helped launch the country to the index's leading position.

As in Switzerland, it said high-ranking Nordic countries benefited from strong institutions and excellent education and training, but said they lagged in labor market flexibility.

Most European Union countries saw stable competitiveness readings over the past year, but Italy's competitiveness ranking fell to 42nd - compared to 38th last year - because of ongoing macroeconomic and institutional weakness.

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.

China's ranking also fell - to 54 from last year's 48.

[bruinbirdman]

"fill your car with gas, purchase a computer, or simply order a Pizza and you will know that their people simply do not have even half of our standards of living"

Try opening a business. Impossible.

yitbos

[jveritas]

Exactly.

[jveritas]

"The table below includes data for the year 2005 for all 181 members of the International Monetary Fund, for which information is available. Data are in International dollars. The table excludes Bermuda which is one of the British overseas territories. Bermuda has the highest GDP PPP in the world at $69,900 (2004 est.) according to the CIA Worldfact book." http://en.wikipedia.org/wiki/List_of_countries_by_GDP_%28PPP%29_per_capita

Rank Country GDP $ per capita 1 Luxembourg 69,800. 2 Norway 42,364. 3 United States 41,399. 4 Ireland 40,610. 5 Iceland 35,115. 6 Denmark 34,740. 7 Canada 34,273. 8 Hong Kong 33,479. 9 Austria 33,432. 10 Switzerland 32,571. 11 Qatar 31,397. 12 Belgium 31,244. 13 Finland 31,208. 14 Australia 30,897. 15 Netherlands 30,862. 16 Japan 30,615. 17 Germany 30,579.

The US is third in individual income after Luxemburg and Norway but we still have the best standards of living since purchasing goods in the US is much less expensive than all the countries on that list, only Canada may come close to us when it comes purchasing goods.

PS: The US has more millionaires than the whole population of Norway and Luxembourg combined.

[Dick Holmes]

Also from Wikipedia:

There are many factors being considered before measuring standard of living. Some factors are gross domestic product, the per capita income, population, infrastructural development, stability (political and social), and many other indicators.

and

GDP counts work that produces no net change or that results from repairing harm. For example, rebuilding after a natural disaster or war may produce a considerable amount of economic activity and thus boost GDP, but it would have been far better if the disaster had never occurred in the first place. The economic value of health care is another classic example - it may raise GDP if many people are sick and they are receiving expensive treatment, but it is not a desirable situation. Alternative economic measures, such as the standard of living or discretionary income per capita better measure the human utility of economic activity.

We spend the most on healthcare, also on criminal justice and incarceration, of any of the top ten countries. This spending all goes into the GDP, but it might not increase our standard of living relative to the other countries.

[bruinbirdman]

" only Canada may come close to us when it comes purchasing goods"

The CIA World Factbook calls it GDP-per capita (PPP) - personal purchasing power.

CIA The World Factbook - Purchasing Information

Select country/select "economy" (upper right)

yitbos

[Dick Holmes]

Does this really mean anything? It looks like stability factors very heavily in their determination of rankings.

I just saw this Forbes article on it.

The U.S,, which would have ranked at the top last year on the new methodology (although it was second on the old one), continues to score well for being business-friendly, having efficient markets, and for its world-class technology development. But the overall score was pulled down to sixth this year, by its budget and trade deficits. Any disorderly adjustment of such macroeconomic imbalances, the WEF warns, risks knocking the U.S. further down the ranks.

So, last year's U.S. performance would have given us first place, but we dropped to sixth on budget and trade deficits? Deficit's going down again, so we should be back on top next year.