Switzerland Tops US As Most Competitive Economy

The World Economic Forum says that the United States is no longer the world’s most competitive economy. Switzerland has taken that role. The culprits for the weaker US position are its weakened financial markets and what the organization calls worsening macroeconomic stability. As part of the project more than 13,000 business leaders were polled in 133 economies.

Rounding out the top ten nations in global competitiveness in the report were Singapore, Sweden, Denmark, Finland, Germany, Japan, Canada, and the Netherlands.

The analysis has a number of weaknesses.  The report defines “competitiveness as the set of institutions, policies, and factors that determine the level of productivity of a country.” That, in turn, is based on twelve factors: 1) the effectiveness of institutions, 2) infrastructure, 3) macroeconomic stability, 4) health and primary education, 5) higher education and training, 6) goods market efficiency, 7) labor market efficiency, 8) financial market sophistication, 9) technical readiness, 10) market size, 11) business sophistication, and 12) innovation.

The weakness of this analysis is that a number of the factors contradict one another. Switzerland has advantages in education and market sophistiation because of its market size. The US cannot be measured by the same standard because it has more than 300 million people. China cannot be measured on the standard because of its 1.4 billion people. The labor market in China may be efficient due to low cost workers, but it may not be able to use that to make up the productivity of a highly educated workforce in a highly developed country like Japan.

A list of the reasons that comparing global competitiveness across over 100 nations cannot be fairly benchmarked based on the World Economic Forum’s broad measurements could go own for hundreds of pages. The most reasonable argument is that, over so may nations, there are too many apples-to-oranges match-ups.

Douglas A. McIntyre