Swift gains in competitiveness by emerging nations are challenging the supremacy of industrialized economies and raising the prospect of a protectionist backlash, a leading report said May 10. The U.S. remained anchored in first place in the IMD business school's 2006 World Competitiveness Yearbook but 40 of the 55 economies surveyed are closing the gap on the world's biggest economic and corporate power. They include a traditional array of smaller Asian and European nations, led by Singapore and Hong Kong in second and third place in the IMD competitiveness ranking.
But emerging giants like mainland China -- which rose from 18th to 15th position in the annual ranking -- and India -- 27th -- are also catching up on the U.S. at a rate of more than 2.5% a year, the report said.
Germany (16) made the biggest gains for 2007 (+9) on the back of improved economic performance.
Although Russia is lower down the ranking in 43rd place, its ompetitiveness has grown by an average of nearly 5% a year over the past decade compared to the U.S.
Some emerging nations and established economies have tended to lag behind the top league in the ranking in recent years because of their patchy competitiveness, the IMD said. They include Brazil, France, Indonesia, Italy, Mexico, the Philippines and Turkey.
South Africa dropped 12 places to 50th due to high unemployment, societal and legislative problems that hamper efficiency, and poor infrastructure.
The overall trend "could lead to an increase in protectionist measures in Europe and the U.S.," Stephane Garelli of the Lausanne-based IMD warned. Garelli said industrialized nations would find it hard to tolerate the loss of some of their "business jewels" to a growing number of new brands and companies from Asia, Russia and the Gulf that are buying up industrial assets.
The annual IMD report assesses economic performance, government and business efficiency, and infrastructure -- including factors like education, technology, health and social services -- to establish its annual ranking.
Copyright Agence France-Presse, 2007