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FREE FALLIN’: United States Falls to Number Two in World Competitiveness Rankings, Number Thirty-Six in Health and Primary Education

Rating
"Quality higher education and training is crucial for economies that want to move up the value chain beyond simple production processes and products."

After several years at the top of the rankings, the United States has fallen to second place behind Switzerland in the World Economic Forum’s (WEF) competitiveness rankings, according to The Global Competitiveness Report 2009-2010, which was released on September 8.

Each year, the WEF issues the report to shed light on the key factors that determine economic growth and to explain why some countries are more successful than others in raising income levels and opportunities for their populations. It also includes comprehensive listings of the main strengths and weaknesses of countries, making it possible to identify key priorities for policy reform. A key feature of the report is the Global Competitiveness Index (GCI), which ranks 133 countries based on twelve pillars of competitiveness that are grouped into twelve categories.

The WEF attributes Switzerland’s rise to the top to its relatively stable performance. In contrast, the United States has seen a weakening across a number of areas, most notably in its financial market sophistication, which fell from ninth to twentieth, and macroeconomic stability, which fell to ninety-three from sixty-six. The report notes that the decline in these two factors is not surprising considering that the financial crisis “originated in large part” in the United States.

U.S. Rankings in Each of the Twelve Categories of the GCI

Institutions: 34
Infrastructure: 8
Macroeconomic Stability: 93
Health and Primary Education: 36
Higher Education and Training: 7
Goods Market Efficiency: 12
Labor Market Efficiency: 3
Financial Market Sophistication: 20
Technological Readiness: 13
Market Size: 1
Business Sophistication: 5
Innovation: 1

With the exception of macroeconomic stability, the United States received its lowest ranking for health and primary education, which fell from thirty-fourth to thirty-sixth. Within that category, the United States fares poorly in several health issues, including HIV prevalence (eighty-fifth) and infant mortality (thirtieth). It also receives low marks for the quality of its education expenditure (forty-fifth) and primary education (thirtieth).

As governments from around the world look to cut spending to reduce the public debt brought about by stimulus spending, the report argues that it will be “essential to avoid significant reductions in revenue allocation” to health and public education.

The United States fares much better in higher education and training, ranking seventh overall behind Finland, Denmark, Sweden, Iceland, Singapore, and Switzerland. But even within this category, the United States receives poor rankings in quality of math and science education (forty-eighth) secondary enrollment (forty-third), and quality of the education system (twenty-second).

“Quality higher education and training is crucial for economies that want to move up the value chain beyond simple production processes and products,” the report reads. “In particular, today’s globalizing economy requires economies to nurture pools of well-educated workers who are able to adapt rapidly to their changing environment.”

The report also includes the results of an opinion survey of business executives on the most problematic factors for doing business in their country. For the United States, respondents ranked access to financing (19 percent), tax rates (14.1 percent), and tax regulations (12.8 percent) in the top three. Of the fifteen answers, poor work ethic in the national labor force (7 percent) ranked sixth while an inadequately educated workforce (5.6 percent) was seventh.

Due in no small part to the worldwide economic recession, the report finds a measurable decline from last year in the average GCI score for the top ten countries, dropping from 5.51 (out of 7.00) to 5.45 this year, as seen in the table below.

The Top Ten: Global Competitiveness Index 2009-10 Rankings

Country  

GCI Rank (2009-10)

GCI Score (2009-10)

GCI Rank (2008-09)

CGI Score (2008-09)

Switzerland

1

5.60

2

5.61

United States

2

5.59

1

5.74

Singapore

3

5.55

5

5.53

Sweden

4

5.51

4

5.53

Denmark

5

5.48

3

5.58

Finland

6

5.43

6

5.50

Germany

7

5.37

7

5.46

Japan

8

5.37

9

5.38

Canada

9

5.33

10

5.37

Netherlands

10

5.32

8

5.41

“The strong interdependence among the world’s economies makes this a truly global economic crisis in every sense,” said Klaus Schwab, founder and executive chairman of the World Economic Forum. “Policy-makers are presently struggling with ways of managing these new economic challenges, while preparing their economies to perform well in a future economic landscape characterized by growing uncertainty. In a difficult global economic environment, it is more important than ever for countries to put into place strong fundamentals underpinning economic growth and development.”

Moving up two spots in the rankings to number three is Singapore, which the report credited for its efficiency of goods and labor markets (first), financial market sophistication (second), world-class infrastructure (fourth), and strong focus on education which provides highly skilled individuals for the workforce. Further down the rankings, the United Kingdom falls to thirteen on the continued weakening of its financial markets. China, at twenty-nine, continues to lead large developing economies, while India (forty-ninth) and Brazil (fifty-sixth) continue to improve.

Download the complete report at http://www.weforum.org/en/initiatives/gcp/Global%20Competitiveness%20Report/index.htm.

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