U.S. manufacturers continue to complain about what they perceive to be an uneven international playing field. Yet the U.S. again ranks No. 1 in world competitiveness, according to IMD, a leading business school based in Lausanne, Switzerland. The 2005 edition of IMD's annual World Competitiveness Yearbook, containing data on 60 economies around the globe, was released in mid-May.
The economy of Hong Kong, a special administrative area within China, ranks second on the list, up from sixth place last year. Singapore is third, down from No. 2 in 2004. Rounding out the top five positions are Iceland at No. 4, up from fifth last year, and Canada at No. 5, down from No. 3 in 2004.
The least competitive economies on IMD's list, with the lowest ranking listed first, are Venezuela, Indonesia, Argentina, Poland and Mexico.
The 10 Most Competitive Economies
1. United States
2. Hong Kong
Source: IMD 2005 World Competitiveness Yearbook
The U.S. is top-ranked by IMD on its GDP, investment flows, stock market capitalization, the availability of venture capital, its ability to attract highly skilled foreign workers, business spending on R&D, the numbers of computers in use, its high-tech exports, and the number of foreign patents awarded.
However, the U.S. also comes in for 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.," asserts Stephane 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 does 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."