The UK needs more scientists, better government procurement, and more corporate spending on RD. As for the US, its privileged position in the global economy could be under threat. Its government spends too much, especially on defence, and its current trade deficit poses a major threat, says a new report from the World Economic Forum.
Until last year, the US was the most competitive economy in the world, but it’s slipped back to sixth place, behind Switzerland, Finland, Sweden, Denmark and Singapore.
The top rankings of Switzerland and the Nordic countries show that good institutions and competent macroeconomic management, coupled with world-class educational attainment and a focus on technology and innovation are a successful strategy for boosting competitiveness in an increasingly complex global economy. Business activity in these countries benefits from a well-developed institutional framework, characterized by the rule of law, an efficient judicial system and high levels of transparency and accountability within public institutions. Excellent infrastructure is an additional positive feature of the business environment says the World Economic Forum.
But poor old Uncle Sam. As Augusto Lopez-Claros, Chief Economist and Head of the World Economic Forum’s Global Competitiveness Network said: ” Two areas are of some concern and if unattended could allow other countries - in a highly competitive global economy - to challenge the US’s privileged position. First, with potentially open-ended expenditure commitments linked to defence and homeland security, ongoing plans to lower taxes further, as well as other longer-term potential claims on the budget, the prospects for sustained fiscal adjustment seem not too bright. With a low savings rate, record-high current account deficits and a worsening of the US’s 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. Second, while the US has, in general, an excellent institutional framework, the quality of the country’s public institutions falls somewhat short of the levels of transparency and efficiency seen in other OECD members.”
As for the UK, Mr Lopez-Claros said: “As a country on the leading edge of technological innovation, it also does very well for business sophistication and technological readiness but slightly less well for innovation, where it could see improvements in government procurement of advanced tech products, the availability of scientists and engineers and company spending on RD”.
The UK stands in tenth place, behind Japan, Germany and the Netherlands.
As for the future: “Our indicators point to the rapidly growing importance of higher education and training as engines of productivity growth. Countries that, like the Nordics, are investing heavily in education are likely to see rising levels of income per capita, growing success in reducing poverty and an increasing ability to establish a presence in the global economy”, concluded Mr Lopez-Claros.
For further information
Investment and Business News is a succinct, erudite and informative roundup of today’s top news stories on business and the economy, with analysis thrown in. It’s free, and to subscribe: visit this link
Comments
Trackbacks