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September 05, 2012

Economic Powerhouses Slip in Global Competitiveness Rankings

by Lisa Schlein

The World Economic Forum is warning governments to enact long-term measures to enhance competitiveness or jeopardize their future economic prosperity. Switzerland, Singapore and Finland top this year’s Global Competitiveness rankings of 144 countries, while Burundi holds up the bottom. 

Northern and Western European countries dominate the top 10 most competitive countries in the world. Asia is heavily represented with Singapore, Hong Kong, and Japan figuring among the most competitive economies.
 
The United States remains an extremely productive economy, but has continued a four-year decline, falling two places to seventh position in the Global Competitiveness rankings.  

World Economic Forum Lead Economist Jennifer Blanke tells VOA the United States is still the world’s innovation powerhouse. She says its markets work efficiently and it has some of the best universities, but it has some serious weaknesses cutting into its competitive edge.

“There is continuing concern about the macro-economic environment, continuing debt levels - the inability to get the spending under control and really political deadlock about how to even deal with this issue," says Blanke. "And, this is leading to concern about political institutions in general. So, the business sector has concerns about its confidence in politicians to make the sorts of decisions that are needed going forward.

The report finds the Asian and Pacific remains among the fastest growing regions worldwide, with several economies performing strongly - notably Singapore, Hong Kong, Japan, Taiwan, China and South Korea.
   
But China has dropped three places to 29th position in the competitiveness ranking. Nevertheless, the report says China continues to lead the group of large emerging-market economies. Of the so-called BRICS group, which includes Brazil, Russia, India, China and South Africa, only Brazil has moved up in the rankings. Economist Blanke says it is not clear where the world will have to look for growth in the coming years as the Chinese and Indian economies slow down. She says countries need to consolidate their situations at home.

“The Europeans really need to deal with their sovereign debt crisis and get some of these countries growing again," she says. "They need to be thinking beyond the short-term. They need to get this macro-house in order, but then they need to be thinking about the sorts of investments that will get them there. Equally, the Chinese, as I mentioned, need to continue working on their markets."

The report says the Middle East and North Africa continue to be affected by political turbulence. Syria does not appear in this year’s list because researchers could not collect the data needed.

Authors of the report find Sub-Saharan Africa has grown impressively during the past 15 years, registering growth rates of more than five percent in the past two years.

South Africa and Mauritius are in the top half of the rankings. Ghana and Rwanda have moved up 11 and seven positions respectively. Liberia and Seychelles this year have entered the competitiveness rankings for the first time.

But the report says Sub-Saharan Africa lags behind the rest of the world in competitiveness, and the continent will continue to be a minor player until it undertakes necessary government and institutional reforms.