Switzerland has knocked the United States off its position as the No. 1 most competitive country in the world as the U.S. banking system crash left the country more exposed to some long-standing weaknesses. A report released by the World Economic Forum showed economies with a large focus on financial services such as the USA, Britain or Iceland were the big losers of the crisis. The US slipped to second place for the first time since the introduction of the index in its current form in 2004. It is important to note that the study found trust Swiss banks have also declined, but in terms of soundness, it ranked 44th. The U.S. fell to 108, right behind Tanzania. Wow. That’s a major fall.
The WEF bases its assessment on a range of factors, key for any country to prosper. The index includes economic data such as growth but also health data or the number of internet users. The study also factors in a survey among business leaders, assessing for example the government’s efficiency or the flexibility of the labor market.
The WEF applauded Switzerland for its capacity to innovate, sophisticated business culture, effective public services, excellent infrastructure and well-functioning goods markets. The Swiss economy dipped into recession last year, too and had to bail out its largest bank UBS. But its economy is holding up better than many peers and most banks are relatively unscathed by the crisis, which drove U.S. banks into bankruptcy.
The WEF said the U.S. economy was still extremely productive but a number of escalating weaknesses were taking its toll. Concerns were growing about the government’s ability to maintain distance to the private sector and doubts rose about the quality of firms’ auditing and reporting standards, it said. Source: Reuters
It is interesting to note that the report showed the leading emerging markets Brazil, India and China improved their competitiveness despite the crisis. Of course, that doesn’t come as a surprise, especially where China and India are concerned, since they have been the biggest recipients of outsourcing from the U.S.