April 26, 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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Even Boom States Get the Blues

Among them was Lisa Tankersley, whose husband was one of the thousands to land a well-paying job in the oil fields that are helping to drive the economic boom. She arrived at her new home here last Monday afternoon, weary from the two-day drive from East Texas. Fifteen minutes later, not having unloaded a single box, she was ordered by a police officer to evacuate: floodwaters were on the way.

“I was freaking out,” said Ms. Tankersley, who immediately threatened to drive back to Texas but consented to stay indefinitely at the apartment of friends who had also migrated north. “Here I am, hundreds of miles from home, with my two children and all my worldly belongings, and I have no place to live.”

In many ways this has been a year of triumph for North Dakota, home to the nation’s lowest unemployment rate and fastest growing economy. But with historic flooding from one side of the state to the other, this is also the year when North Dakota reminded its residents that even in good times the state is — in the words of Andy Peterson, head of the state Chamber of Commerce — “not for the faint of heart.”

First the Red River flooded to near record heights for the third consecutive year, forcing weeks of desperate work to protect Fargo, the state’s largest city. Later, the unprecedented rise of the Missouri River forced Bismarck, the state’s capital and second largest city, into a flood fight expected to last the whole summer. And over the last week, the Souris River broke the century-old high mark not by inches but by feet, swamping more than a quarter of Minot.

Together, these and other waterways — fed by record rain and snow — harassed large and small communities, forcing evacuations, destroying crops and causing tens of millions of dollars in damage to infrastructure. But even as officials acknowledged that the extreme weather would cause hardships for the many affected residents and perhaps chase away some of the newcomers, they insisted that it would not knock the galloping economy off its stride.

“Will this flooding set us back some? Yes it will,” said Senator John Hoeven, a North Dakota Republican who grew up in Minot and focused on promoting economic development during his three terms as governor before winning election to the Senate last year. “But our fundamentals are there. We’ll recover, we’ll help people recover, and we’ll continue to grow.”

Tucked into a narrow valley and surrounded by plains, Minot, the fourth largest city in the state, offers a case study in this roller coaster year. The city, serving as a regional hub for the northwest corner of the state, has experienced frenetic growth over the last decade, driven largely by development of the nearby Bakken shale field, which has made the state one of the top producers of oil. Then, last week, it went under water.

The Souris River, known as the Mouse after its French name, stopped rising on Sunday. The crest topped the 130-year-old record by almost four feet, lower than predictions. But the river, which flooded many homes to their roofs and displaced an estimated 12,000 people, is expected to subside slowly, so residents must wait to see what damage lies beneath the muddy surface.

“Before the flood, the major challenge Minot faced was how do you handle the growth?” said John Coughlin, a developer who stopped work on several projects to help build protective levees.

“The flood has distracted the forward momentum,” he continued. “The recovery is going to cost money, and it’s going to cost time.”

Over the last decade, the population of North Dakota grew to 673,000, just short of the high mark achieved eight decades earlier. And while high commodity prices in an economy driven by energy and agriculture has led the growth, Gov. Jack Dalrymple said a diversified economy had been fostered by businesses-friendly laws, regulations and taxes passed during years of economic malaise and population loss.

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