The World Economic Forum says the United States has lost its position as the world’s most competitive economy. The research institute’s chief economist, Augusto Lopez-Claros, said that is because of its huge spending commitments, proposals to further lower taxes, and long-term potential costs from health care and pensions. The US, which fell to sixth place, has been replaced at the top by Switzerland.
Finland remains second, Sweden rose to third from seventh place last year and Germany fell from sixth to eighth while the UK dropped from ninth to tenth.
Augusto Lopez-Claros said some euro zone countries are taking the wrong approach: “Because of the slowdown of activity in the global economy after September 11, many of the governments in Europe became much more focused on growth, but I think this is a misguided policy, If you really want to set a strong basis for future growth you have to do reforms now, it is always the right moment to do them now.”
The placing are calculated from hard economic data and an annual survey carried out by the World Economic Forum talking to over 11,000 business leader. EuroNews asked Lopez-Claros if the countries use the information. He said: “Many of them do, there are some countries – for example Korea – where the government takes this work extremely seriously. Why? – because it provides a very large number of indicators, which suggest what are the areas of strength and what are the areas of weakness, and then if can be used for policy formulation.”
The World Economic Forum said Switzerland and the Nordic countries got their high-ranking because they benefited from strong institutions and excellent education and training, but it also pointed out that they have less labour market flexibility than some other nations.