Despite the talk among U.S. manufacturers about an uneven international playing field and a disproportionate regulatory burden, the United States again ranks No. 1 in world competitiveness, according to IMD, a leading business school based in Lausanne, Switzerland. IMD's World Competitiveness Yearbook 2005, containing data on 60 nations and regions and based on 314 criteria, is being released today.
Hong Kong's economy ranks second, up from sixth last year. Singapore is third, down from No. 2 in 2004. Rounding out the top five, Iceland is No. 4, up from fifth place in 2004, and Canada is No. 5, down from No. 3 last year.
The five least competitive economies, with the lowest ranking listed first, are Venezuela, Indonesia, Argentina, Poland and Mexico.
At No. 31, China (not including Hong Kong's high-ranked economy) is in the middle of the competitiveness pack this year. That's significantly lower than last year's No. 24 ranking, a drop that IMD attributes to a recent "extremely negative opinion survey" that seems to question the sustainability of China's recent economic expansion.
The U.S. is top-rated by IMD on GDP, investment flows, stock market capitalization, availability of venture capital, its ability to attract highly-skilled foreign workers, business expenditures on R&D, computers in use, high-tech exports, and number of foreign patents awarded.
But the U.S. also comes in for some pointed criticism. "The [federal] budget deficit, which runs at 3.4% of GDP, should be a far more serious matter of concern in the U.S.," says Stphane Garelli, a professor at IMD and author of the yearbook's executive summary. "Such a persistent deficit, which is unlikely to be reduced in the near future, has a number of enduring effects, the least of which is the explosion of debt. [While] this debt dies not constitute, per se, a major problem for the U.S. economy . . . it is far more disquieting for the world economy in general, since it puts considerable strain on the capital market," he states.