U.S. Competitiveness Shows Weakness: Even the Strongest Economies Must Beware of Potential Crises

Article excerpt

The United States remains the most economically competitive nation in the world, but signs of weakness loom on the horizon, according to the World Economic Forum. Following the United States at the top of the Forum's "Global Competitiveness Report 2007-2008" are Switzerland, Denmark, Sweden, and Germany.

"The United States confirms its position as the most competitive economy in the world," notes the report's co-editor, Columbia University economics professor Xavier Sala-i-Martin. "The efficiency of the country's markets, the sophistication of its business community, the impressive capacity for technological innovation that exists within a first-rate system of universities and research centers all contribute to making the United States a highly competitive economy."

The recent problems in the U.S. housing market, especially with the flood of defaults on so-called subprime mortgages, raised warning flags among the world's analysts on the overall health of the U.S. economy, as well as its impacts globally. The U.S. subprime mortgage crisis was followed by a global credit crunch, notes Sala-i-Martin.

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In developing its most recent Global Competitive Index, first introduced in 2004, the World Economic Forum used both publicly available data and its own Executive Opinion Survey, polling 11,000 business leaders in 131 countries. The Index rankings are based on 12 key indicators of competitiveness: institutions, infrastructure, macroeconomic stability, health and primary education, higher education and training, goods market efficiency, labor market efficiency, financial market sophistication, technological readiness, market size, business sophistication, and innovation. …