Hong Kong And Singapore Pass US In Competitiveness

For the first time in 16 years, the US is not the most competitive nation in the world. The IMD World Competitiveness Center, which measures 58 economies put Singapore and Hong Kong ahead of the US for 2010. But not by much. Singapore had a score of 100, followed by 99.357 for Hong Kong, and 99.091 for the US. The three least competitive nations were Venezuela, Ukraine, and Croatia. The rankings are based on 328 criteria that measure how the nations create and maintain conditions favorable to businesses.The IMD said that the US was hurt by the recession. The group reported that “Singapore and Hong Kong have displayed great resilience through the crisis-despite suffering high levels of volatility in their economic performance – and they are now taking full advantage of strong expansion in the surrounding Asian region. In Q1 in 2010, the Singaporean economy grew by more than 13%.” In other words, negative GDP growth trumped the American advantages based on work force productivity and technology.

The US should be encouraged by China’s ranking–No. 18 with a rating of 82.182. The mainland’s lack of sophisticated technology and highly advanced manufacturing capacity cause a headwind to its economy that may take years to overcome. Germany, Canada, Sweden, and Taiwan all place above China. Ireland, the UK, France, and Korea were not far behind.

The data indicates that if the US can improve GDP growth and make a dent in high unemployment, it will move back into the top spot and perhaps do so by a large margin. “Creditworthiness” is part of the IMD measurement process, so a drop in the US deficit would also improve the US rank. Not surprisingly, the agency said that high debt levels hurt competitive ranks for Italy, Portugal, Iceland, and Greece. These nations not only have large deficits, but they are highly unlikely to be able to repair their economic problems.

“The quality of debt depends both on the collateral and the capacity to repay. In short, countries such as Greece, Portugal and Spain have a credibility problem today not only because they have a debt crisis, but also because they lack the means to adequately repay (growth rate, current account balance, investments abroad, etc).”, the IMD said The US, at least for now, is not in that category.

Douglas A. McIntyre