America in the World Economy: Global Competitiveness Report

Those who are keenly interested in the upcoming debate on how to effectively restimulate the American economy, and most especially in the broader context of the role and place of the American economy within the larger world economy, would profit from reviewing the World Economic Forum’s Global Competitiveness Report 2008-2009 released in early October.

The Forum summarizes its analysis by reporting that “the United States tops the overall ranking . . . [while] Switzerland is in second position followed by Denmark, Sweden and Singapore. European economies continue to prevail in the top 10 with Finland, Germany and the Netherlands following suit. The United Kingdom, while remaining very competitive, has dropped by three places and out of the top 10, mainly attributable to a weakening of its financial markets.” A summary of the complete rankings is available here. To browse the contents of the document, look here.

The forum’s focused brief summary profile of America’s current status appears in the Country Profile Highlights section of the report:

“Despite the financial crisis, the United States continues to be the most competitive economy in the world. This is because it is endowed with many structural features that make its economy extremely productive and place it on a strong footing to ride out business cycle shifts and economic shocks. Thus, despite rising concerns about the soundness of the banking sector and other macroeconomic weaknesses, the country’s many other strengths continue to make it a very productive environment. The United States is ranked first for innovation, and its markets support this innovative activity through their efficient allocation of resources to their most effective use. However, the United States has built up large macroeconomic imbalances over recent years, with repeated fiscal deficits leading to rising and burgeoning levels of public indebtedness. This indicates that the country is not preparing financially for its future liabilities and is on the road to making interest payments that will increasingly restrict its fiscal policy freedom going into the future.”

As with so many other similar analyses, the World Economic Forum’s report is an excellent reminder that neither euphoria nor despair is an appropriate response to our current challenges. We have much to do, but if done wisely it can be done well.

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Published in: on December 28, 2008 at 11:22 am  Leave a Comment  

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