US tops index of global competitiveness

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Chris Giles
FT Syndication Service
WASHINGTON: The US came top of a closely-watched league table of competitiveness on Wednesday, as its faltering economy was nevertheless praised for the efficiency of its market and its ability to innovate.
In its annual report on global competitiveness, the World Economic Forum, the Swiss-based think tank, said that US economic imbalances posed a threat to its productivity and the global economy, but concluded that its achievements outweighed these risks.
This year's annual ranking exercise will confuse avid WEF watchers as a change in the methodology has promoted some countries such as the US and Germany far above last year's published league table positions, while demoting Finland, once almost always top of the tree to sixth place.
The rankings of 131 of the world's countries are based on an amalgam of many published economic statistics and impressionistic surveys of corporate leaders regarding each country's business climate.
Professor Michael Porter of Harvard Business School and a co-director of the report, said the aim of the rankings was to "enable countries to move beyond abstract theoretical policy debates and identify the specific tasks ahead of them".
Such countries as China and India often associated with high levels of competitiveness rank relatively low down the table at 34 and 48 respectively because their advantages on cost are compromised by other weaknesses.
China needs to improve in the areas of higher education, financial markets and training, the WEF said, while India, falling slightly down this year's league, is plagued by macroeconomic instability, its poor health and education systems and low labour market efficiency.
UK readers of the report might be confused by its position in the ranking. Last year the WEF said Britain came 10th so its promotion to 9th place might be seen as giving Gordon Brown's government a boost. But the WEF's new calculations, show the UK plunging from 2nd position last year to 9th spot, casting rather a black mark over the Labour government, and giving the Conservative opposition ammunition.
The UK was praised for its sophisticated financial markets but criticised for "public sector deficits and rising levels of public indebtedness, spending today instead of saving in order to meet tomorrow's burgeoning liabilities".