The World Economic Forum’s newly released economic report bumps the United States up to third position from fifth place for global economic competitiveness, lagging just behind Singapore and Switzerland.
The annual survey examines competitiveness through cataloging policies which contribute to productivity levels in a country. Some of these measures include higher education, technological readiness, macroeconomic environment, and labor market efficiency.
Of the top ten countries in the index, six of them are located in Europe, although the report notes that southern European countries are quite distinct from their northern counterparts. Countries like Spain, Italy, Portugal, and Greece need to aggressively tackle public debt problems and improve macroeconomic performance. But even in southern Europe, there is a marked difference. Spain, Portugal, and Greece have made significant strides, while Italy and France still remain stagnant.
Switzerland, on the other hand, has dominated the top spot of the rankings for the past six years, owing to world class education, and labor market efficiency, among other measures. Three Asian countries made the list, with Japan also moving from ninth place to sixth.
Xavier Sala-i-Martin, a professor of economics at Columbia University, said: “The report highlights a shift in the narrative of the global economy from one year ago, when fire-fighting still characterized much of global and regional economic policy. This has now given way to an increasing urgency for leaders to make wide-ranging structural reforms to their economies.”
The report commends the United States for its upward move in the rankings, but points out that levels of innovation may be unstable in the future if the U.S. doesn’t take serious steps to reduce macroeconomic instability. On the macroeconomic measure, the U.S. sits at a poor 117 out 148 countries surveyed.
“Innovation becomes even more critical in terms of an economy’s ability to foster future prosperity,” said Klaus Schwab, founder and executive Chairman of the World Economic Forum. “I predict that the traditional distinction between countries being ‘developed’ or ‘less developed’ will gradually disappear and we will instead refer to them much more in terms of being ‘innovation rich’ vs. ‘innovation poor’ countries.”
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