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U.S. Global Business Competitiveness Slipping

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The World Economic Forum published a study on global business competitiveness that ranks 144 nations according to indicators in 12 categories.  We American’s sometimes inflate our greatness among nations.  With respect to our Militarily this is justified.  The United States represent nearly half of the worlds total military capability.  But on measures of national well being, ecology, human rights, health care, press freedom and many other critical areas we often fall short in comparison to other advanced nations.

Given how highly our politics regards U.S. business interests, you might assume our global business competitiveness makes us number one in the world.  Keep in mind as you read on that many of the specific measures that make businesses competitive are not in the best interest of ordinary citizens.  Business interests and  social interests are sometime opposed.

The business competitiveness  study categories and where the United States ranks:

          CATIGORY                                                            RANK  (Out of 144)

1.   Institutions         42
2.   Infrastructure       14
3.   Macroeconomic Environment     111
4.   Health and Primary Education      34
5.   Higher Education and Training        8
6.   Goods Market Efficiency       23
7.   Labor Market Efficiency         6
8.   Financial Market Development        16
9.   Technological Readiness       11
10.  Market Size            1
11.  Business Sophistication       10
12.  Innovation           6

Overall, the United States is very competitive, ranking 7th out of 144 nations.  This is a decline from last year, however, when we were 5th out of 142 countries.  Major reasons for the overall low marks can be found in our Macroeconomic situation, primarily our  government budge imbalance and huge national debt on which we were ranked 140th and 136th respectively .  Our gross national savings is also very low, with a rank of 114th in the world.  Still, confidence in America’s credit rating remains high, 89.4%, or 11th among the nations.

Looking at our strengths and weaknesses, in the Institutions category our top ranking was 5th in investor protections.  Our next highest rankings were in efficiency of corporate boards (23rd), intellectual property protection and ethical behavior of firms (both ranked 29th).  Our lowest ranking was on the business cost of terrorism (124th). Next lowest rankings were in the business cost of crime and violence, and the business cost of organized crime (86th and 87th).

We did better in Infrastructure.  We ranked 1st in available airline seats and 15th in telephone land lines.  Interestingly, mobile phone subscriptions were our lowest indicator (72nd) followed by the quality of our electric supply (33rd in the world).  Our transportation infrastructure didn’t fair much better (30th).

In the category of Health and Primary Education we had no malaria impact on businesses (1st) but the prevalence and business impact of HIV was high ranking the US 92nd and 90th in the world.  Also surprising was our low ranking on primary school enrollments (58th), infant mortality (41st) and the quality of our primary education (38th).

In Higher Education and Training we are doing well in post-secondary education (2nd) and the availability of research and training opportunities (9th).  We ranked 47th in secondary school enrollment and the quality of our math and science education.

In Goods and Market Efficiency we rank 9 and 10 in market dominance and buyer sophistication.  Our worst ranking is on the business tax rate to profit ration (103rd).

In the area of Labor Efficiency we apparently have  the lowest labor redundancy costs in the world (1st) and our hiring and firing practices are also great for business (8th).  The labor redundancy variable estimates the cost of advance notice requirements, severance payments, and penalties due when terminating a redundant worker. We also ranked 5th in the brain drain measure and 8th in the efficiency of our hiring and firing practices.  Our low rankings here were in the women to men ratio in the work force (we ranked 44th) and our cooperation in labor-employer relations (42nd) , perhaps no surprise give our ease and thrift in firing people).

In the Financial Market Development category we are very competitive in the availability of venture capital (10th) but weak on the strength of our banking institutions (80th).  Regarding the regulation of security and exchange, we also ranked low (39th) although it is unclear if this means we are over or under regulated.

In the area of Technological Readiness we ranked 8th in the number of internet subscribers yet 20th in the percentage of individuals using the internet.  We rank lowest, (43rd) on foreign direct investment and technology transfer.

Market Size, we remain number one in domestic market size (we buy more things) and number two in foreign market size.

In the category of  Business Sophistication we are third in the extent of marketing and ranked in the low teens on other measures, such as production process (13th) and local supplier quality/quantity (14th).

When it comes to Innovation, The United States is still doing very well.  We are ranked in the single digits on most measures, including University-industry collaboration in R&D (3rd), Availability of scientists and engineers (5th), Quality of scientific research institutions (6th), Capacity for innovation and Availability of scientists and engineers (both ranked 7th).  Our lowest ranking in this area was in government procurement of advanced tech products (15th).

Read more at:   http://reports.weforum.org/global-competitiveness-report-2012-2013/


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