News article from Reuters regarding the 2006 World Economic Forum's "Global Competitiveness Rankings". The World Economic Forum is an "independent international organization committed to improving the state of the world by engaging leaders in partnerships to shape global, regional and industry agendas."
The United States fell to sixth place in the World Economic Forum's 2006 global competitiveness rankings, ceding the top place to Switzerland, as macroeconomic concerns eroded prospects for the world's largest economy.Also from the World Economic Forum's website, we have this explanation of what this Global Competitiveness Index means:
... The Forum said Washington's huge defense and homeland security spending commitments, plans for further tax cuts and long-term potential costs from health care and pensions were creating worrisome fiscal strains.
"With a low savings rate, record-high current account deficits and a worsening of the U.S. net debtor position, there is a non-negligible risk to both the country's overall competitiveness and, given the relative size of the U.S. economy, the future of the global economy," it said.
Switzerland was deemed the most competitive economy in 2006, followed by Finland, Sweden, Denmark and Singapore. After the United States, which had topped the 2005 index, Japan, Germany, the Netherlands and Britain rounded out the top 10.
The Geneva-based group Forum said that Switzerland's well developed infrastructure, plentiful scientific research and intellectual property safeguards helped vault the small Alpine country into the index's leading position.
As in Switzerland, it said high-ranking Nordic countries benefited from strong institutions and excellent education and training, but said they lagged in labor market flexibility.
Russia slipped nine places for a 62nd-place ranking this year, largely due to private sector misgivings about the independence of the country's judiciary, according to the report based on surveys of more than 11,000 business leaders worldwide.
"Legal redress is Russia is neither expeditious, transparent nor inexpensive, unlike in the world's most competitive economies," it said. "Partly because of this, the property rights regime is extremely poor and worsening."
"The process of growth is complex. The Global Competitiveness Index is an attempt to capture this complexity by modelling growth as a complicated combination of factors that matter differently for different countries." ~ Xavier Sala-í-Martin, Professor, Economics Department, Columbia UniversityThe WEForum goes on to say elsewhere, this ranking is a forecast for economic growth potential. Most of the members that you see quoted on their webpage and in articles are economists (despite their lofty announcements about who they are and what they do).
What the WEForum is saying, we might already know in other forms. The US is in debt as George W. Bush continues to spend like a drunken sailor, and this weighs heavily on our economic future.
Russia - despite a 7.5% GDP growth thus far in 2006 and the optimistic pronouncements of Finance Minister Alexei Kudrin - has some issues to work on also. In truth, it has taken Russia all of 16 years to approach the GDP levels of 1990, and a large measure of that growth is in oil production. Russia's GDP is projected to grow by 28.9% in the period from 2004 to 2007. I should note that it is unclear if these figures are corrected for inflation. It would be a mistake to say that all of this growth is due to oil - but certainly outside of the growth in oil prices and production, the economic picture for Russia is much less rosy. Oil revenues are currently 75% of the Russians governments revenues, and are anticipated to remain approximately 50% for the forseeable future.
Despite the economic success that Russia has seen, according to a Levada opinion poll, some 47% of Russians believe that a financial crisis is likely to happen THIS YEAR. This is a persistent belief and worry among Russian citizens despite the Stabilization Fund of $64.7 billion as of September 1st and despite a generally favorable economic forecast. And it is easy to see where the average Russian might have cause to worry, when 69% of Russians reported in the same Levada poll that they have no savings (interesting to note that only 9% of Russians reported that the US dollar is the most secure currency for their savings - a big change from even 5 or 10 years ago).