America falls to 5th Place

US falls to 5th in global competitiveness, survey shows

The U.S. tumbled further down a global ranking of the world's most competitive economies, landing at fifth place because of its huge deficits and declining public faith in government, the World Economic Forum said on September 7, 2011.

The short answer: In the WEF's 2011–2012 Global Competitiveness Report, the U.S. fell from 4th to 5th place. Switzerland topped the ranking for the third straight year, followed by Singapore, Sweden, and Finland.

The announcement was more bad news for the Obama administration, then struggling with a sinking economy and an unemployment rate above 9 percent. The results, covering 142 economies, landed a day before President Obama was to address Congress on jobs.

Who topped the ranking?

Switzerland held the top spot for the third consecutive year, praised for "continuing strong performance across the board" — innovation, technological readiness, even-handed regulation, and one of the world's most stable economic environments. Singapore moved up to second, bumping Sweden to third; Finland climbed from seventh to fourth.

Germany, Europe's economic powerhouse, was sixth, followed by the Netherlands and Denmark. Japan came in ninth, Britain tenth, France 18th, and debt-saddled Greece fell to 90th.

How are the rankings decided?

The forum, best known for its annual Davos meeting, has issued the ranking for more than three decades. It blends hard economic data with a survey of 15,000 business executives worldwide. (Global Competitiveness Report)

The forum praised the U.S. for its productivity, highly sophisticated and innovative companies, excellent universities, and flexible labor market — but cited "a number of escalating weaknesses," including rising government debt and declining public faith in political leaders and corporate ethics.

What did it say about emerging markets?

While the U.S. slipped, emerging markets gained ground. China took 26th place, highest among the major emerging economies; Brazil was 53rd, India 56th, and Russia 66th.

"Fiscal imbalances that have been building up around the world are really a danger to future competitiveness," said Jennifer Blanke, a WEF economist — warning that deficits threaten the ability of countries to invest in education, infrastructure, and the other foundations of future competitiveness.

Source: World Economic Forum Global Competitiveness Report 2011–2012, via MSNBC (original 2011 link no longer live).