U.S., Finland Top 2003 World Competitiveness Ranking

By Agence France-Presse The United States and Finland have the most competitive economies in the world, according to the 2003 World Competitiveness Yearbook released by the Swiss business school IMD on May 14. Both countries topped the new split annual rankings of national business and economic efficiency despite restructuring affecting their traditional strengths, the information technology and finance industries, IMD said in its report. The IMD's ranking has been split into two for the first time, separating economies with over 20 million inhabitants from smaller countries. The competitiveness ranking of large economies places the United States ahead of Australia, Canada, Malaysia, Germany and Taiwan respectively. Finland, Singapore, Denmark, Hong Kong, Switzerland and Luxembourg head the list of 29 smaller economies. Australia, Malaysia, Singapore and Hong Kong improved their efficiency over the past year, but the SARS (severe acute respiratory syndrome) outbreak was expected to have "dire consequences" for Asian competitiveness in next year's ranking, IMD warned. The United States maintained its top slot thanks to interest-rate cuts and consumer spending. But the report also warned that the U.S. current account deficit, its expected budget deficit and the Bush Administration's proposed tax cuts could increase foreign debt and lead to a further weakening of the dollar in 2003. "As a consequence, it will be harder for developing nations to raise capital because the U.S. economy would drain most of the world's financial resources," competitiveness director Stephane Garelli of IMD said. Major European economies are battling with deficits, over-regulation and government reform, with Germany (5th), Britain (7th) and France (8th) afflicted by structural problems weighing on their competitiveness, IMD said. "Some fresh air could come from the next wave of EU member states which show solid economic growth," Garelli said. Eight regions have also been integrated into the rankings, which assess various criteria for business efficiency, government efficiency and regulation, infrastructure and economic performance. Sao Paulo state in 13th position of the large economies is rated as more competitive than its home country Brazil (21st), and Zhejiang province on China in 14th place ranks just below mainland China (12th). IMD reveals that only four of the 59 countries and regions in its annual ranking of business and economic efficiency saw their GDP shrink in 2003. "The good news is that the world economy is not in recession. The bad news is that no one realizes it," Garelli commented. Copyright Agence France-Presse, 2003