April 25, 2024

U.S. Slips to Fifth in Global Competitiveness

LONDON — The United States is slipping and emerging markets are improving, but European economies still dominate the list of the most competitive economies in the world, according to a World Economic Forum report released Wednesday.

For the third consecutive year, Switzerland ranked first in the forum’s annual competitiveness survey, which assesses countries based on 12 categories including innovation, infrastructure and the macroeconomic environment.

The United States, which topped the list in 2008, continued its decline, also for the third year in a row, falling one place to fifth. The weaker performance was attributed to economic vulnerabilities as well as “some aspects of the United States’ institutional environment,” notably low public trust in politicians and concerns about government inefficiency.

Singapore overtook Sweden to claim the second position. But perhaps surprisingly, given the crisis of confidence that continues to plague the European financial system, Western European countries dominated the survey’s top 10 economies.

Behind Sweden, Finland ranked fourth and Germany was sixth, followed by the Netherlands and Denmark. Britain was 10th; France was 18th and indebted Greece slid to 90th.

The results show that while competitiveness in advanced economies has stagnated over recent years, it has improved in many emerging markets, the Geneva-based forum said.

“Much of the developing world is still seeing relatively strong growth, despite some risk of overheating, while most advanced economies continue to experience sluggish recovery, persistent unemployment and financial vulnerability, with no clear horizon for improvement,” Klaus Schwab, founder and chairman of the forum, said in a statement.

China, ranked 26th and up one place from a year earlier, was the highest placed of the large developing economies. Among the other major emerging economies, South Africa was 50th, Brazil 53rd, India 56th and Russia 66th.

Among major Asian economies, Japan ranked ninth and Hong Kong 11th. Qatar was the highest ranked country in the Middle East, at 14th, followed by Saudi Arabia at 17th. The United Arab Emirates stood at 27th.

The rankings are calculated from both publicly available data and a survey of more than 14,000 executives in 142 economies. Together they form an index, which was introduced in 2004. The index takes account of 12 categories: institutions; infrastructure; economic environment; health and primary education; higher education and training; goods market efficiency; labor market efficiency; financial market development; technological readiness; market size; business sophistication; and innovation.

“For the recovery to be put on a more stable footing, emerging and developing economies must ensure that growth is based on productivity enhancements,” said Xavier Sala-i-Martin, a professor of economics at Columbia and co-author of the report. “Advanced economies, many of which struggle with fiscal challenges and anemic growth, need to focus on competitiveness-enhancing measures in order to create a virtuous cycle of growth and ensure solid economic recovery.”

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Familiar Obama Theme on Labor Day

Mr. Obama, speaking to a riverfront crowd estimated by the police to number 13,000, said he would propose “a new way forward on jobs” in his speech on Thursday to a joint session of Congress, which returns this week from its August recess.

Mr. Obama did not provide details — “Tune in on Thursday,” he teased — but he said millions of unemployed construction workers would be able “to get dirty” building roads, bridges and other public works under his infrastructure proposals.

Organized labor and business leaders are on board, Mr. Obama said. “We just need Congress to get on board,” he said, prompting cheers of “Four more years!” from an audience filled with members of unions for autoworkers, public employees, service industry workers and teachers.

It remains unclear what new ideas Mr. Obama will propose on Thursday. But he faces high expectations after recent evidence that job growth has stalled and because of his own buildup since announcing a month ago that he would lay out a short-term stimulus program after Labor Day.

Mr. Obama also faces skepticism because of persistent unemployment. Recent polls give him his lowest ratings to date for job approval and his handling of the economy, though the ratings of Congress, and especially Republicans, are even more negative.

Mr. Obama has indicated that besides infrastructure proposals, he will call for extending and expanding temporary tax cuts for businesses and individuals, including a payroll tax cut for which he won Republicans’ support in December after agreeing to extend the Bush-era tax cuts on high income. He is expected to propose that employers get a tax credit for each new person hired, and to help local governments avert more teacher layoffs.

Separately next week, Mr. Obama is expected to recommend ways to reduce annual budget deficits to a special Congressional committee charged with finding up to $1.5 trillion in savings over 10 years. He plans to propose more than that in deficit reductions, aides say, partly to offset the stimulus costs.

But in Detroit Mr. Obama emphasized job creation. His backdrop was the high-rise headquarters of General Motors, which, along with Chrysler, has restructured and returned to profit and hiring after their rescue early in his administration.

“We’ve got a lot more work to do to recover fully from this recession,” Mr. Obama said. “I’m going to propose ways to put America back to work that both parties can agree to because I still believe both parties can work together to solve our problems.”

That expression of faith in bipartisanship drew loud groans of skepticism, reflecting a growing sentiment among Obama supporters that he is too conciliatory toward Republicans.

As if acknowledging the skeptics, Mr. Obama quickly added, to applause: “But we’re not going to wait for them. We’re going to see if we’ve got some straight shooters in Congress. We’re going to see if Congressional Republicans will put country before party.”

Flying here with Mr. Obama were several union leaders, including Richard Trumka, president of the A.F.L.-C.I.O., who has been critical of his compromises with Republicans.

Also joining Mr. Obama was Senator Carl Levin, Democrat of Michigan, who, as Mr. Obama told his audience, gave the president a Labor Day address that President Harry S. Truman delivered in Detroit in 1948, the year of his come-from-behind election after campaigning against “do-nothing” Republicans.

Afterward, Mr. Levin said he told the president, “Here’s a ‘give ’em hell’ kind of speech.”

En route to Detroit, an Obama spokesman, Josh Earnest, volunteered to reporters that the president was in “a good mood.” Yet the familiarity of the day’s theme had to be sobering, particularly since Mr. Obama is just over a year away from Election Day — too little time for unemployment to fall much from heights that give Republicans hope of recapturing the White House.

The president’s Labor Day speeches trace the stubbornness of the crisis he inherited.

In 2009, he spoke to an A.F.L.-C.I.O. picnic in Cincinnati, just after the government reported 216,000 jobs lost in August — relatively good news because it marked a second month of declining losses from a high of 750,000 as Mr. Obama took office. Six months earlier, in February, a Democratic-controlled Congress had passed his two-year, $800 billion stimulus program of tax cuts and spending.

“It’s working,” Mr. Obama said then. Most economists agreed, though many have since concluded that the package was not forceful enough to counter a recession and crises in the financial and housing sectors. Republicans, who generally opposed it, continue to say that the stimulus program failed and that they will not support another round.

“We’re on the road to recovery, but we’ve still got a long way to go,” Mr. Obama said two years ago. That would become a refrain.

Last year, Mr. Obama was in Wisconsin with union families. While private-sector hiring had expanded for eight months, the unemployment rate was 9.6 percent — just a tenth of a percentage point lower than the year before. With his two-year stimulus plan winding down, Mr. Obama announced new plans for infrastructure projects and more.

“Now the plain truth is, there’s no silver bullet or quick fix to the problem,” he said in Milwaukee. “Even when I was running for this office, we knew it would take time to reverse the damage of a decade’s worth of policies that saw a few folks prosper while the middle class kept falling behind.”

But his infrastructure plans went nowhere before Republicans, capitalizing on voters’ economic frustrations, won control of the House in November.

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