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US drops in WEF competitiveness poll

Wednesday 7 September 2011 - by Will Henley

Sweden and Finland have overtaken America to become the world's third and fourth most competitive economies, according to a survey by the World Economic Forum.

The US dropped down to fifth spot in the Davos based foundation's annual 'Global Competitiveness Report', published on Wednesday, cementing a three-year decline for the world's biggest superpower.

Top of the ranking was Switzerland for a straight successive year, with leading Asian economy Singapore nudging in at number two. Britain rose from twelfth last year to number ten, but was still beaten by Germany at sixth spot, Netherlands at seventh and Denmark at eighth.

Japan dropped to ninth from sixth, while Hong Kong fell just outside the top ten at eleventh.

According to the report, while competitiveness in advanced economies has stagnated, emerging markets have been making serious inroads.

The BRICS economies however still have some way to go to catch up with the OECD club of nations. China was the highest placed large developing economy at number 26, with South Africa at 50, Brazil at 53, India at 56 and Russia at 66.

The World Economic Forum cited continuing macroeconomic vulnerabilities and concern over the United States' institutional environment, as well as low public confidence in politicians and concerns over government inefficiency.

"On a more positive note, banks and financial institutions are rebounding for the first time since the financial crisis and are assessed as somewhat sounder and more efficient," it said.

Xavier Sala-i-Martin, professor of economics at Columbia University, and co-author of the report, said: "Amid re-emerging concerns about the global economic outlook, policy-makers must not lose sight of long-term competitiveness fundamentals.

"For the recovery to be put on a more stable footing, emerging and developing economies must ensure that growth is based on productivity enhancements. Advanced economies, many of which struggle with fiscal challenges and anaemic growth, need to focus on competitiveness-enhancing measures in order to create a virtuous cycle of growth and ensure solid economic recovery."

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