Geneva, Switzerland, September 26, 2006--U.S. economic competitiveness fell significantly over the last year, as high budget and trade deficits hurt America's business environment, according to a survey released Tuesday by the World Economic Forum.
The disappointing response to Hurricane Katrina, government corruption and a decreasing talent pool for employment due to immigration restrictions were other factors cited by the forum, which moved the United States to sixth in its "global competitiveness index" from the top spot a year ago.
"While strengths in the technological and market efficiency sectors explain the country's overall high rank, the U.S. economy suffers from striking weaknesses," the report said. "There is significant risk to both the country's overall competitiveness and, given the relative size of the U.S., the future of the global economy."
Switzerland topped the poll, which was conducted for the 27th consecutive year, but only the second year using a new formula, the forum said.
Over 11,000 business leaders in 125 countries took part in the survey, which found that the Alpine nation's institutional environment, infrastructure, efficient markets and high levels of innovation made it the world's most competitive business environment. It ranked fourth a year ago.
"The country has a well developed infrastructure for scientific research, companies spend generously on (research and development), intellectual property protection is strong and the country's public institutions are transparent and stable," the forum said.
Nordic countries — traditionally strong in the survey — took the next three places, with Finland, Sweden and Denmark all praised for running budget surpluses and having low levels of public debt. The forum also lauded the high quality of education and social services in these countries. Singapore was fifth ahead of the United States.
Rounding out the top 10 were Japan, Germany, Netherlands and Britain.
The aim of the survey, the World Economic Forum says, is to examine the range of factors that can affect an economy's business environment and development as it seeks to maintain economic growth — including the levels of judicial independence, protection of property rights, government favoritism in policy-making and corruption.
Emerging economies such as China and India fared modestly.
India came in at 43rd, carried by its innovation and the sophistication of operations. Poor health services, education and public infrastructure held the country back, however, as fewer people enjoy the benefits of the country's robust growth rates. The government also has failed to reduce the public sector deficit, one of the highest in the world.
China dropped six places from last year to 54th. While it has high savings rates and a favorable macroeconomic outlook, the country's state-controlled banking sector and low penetration rates for new technologies need attention, the forum said. Education and environment are other significant weaknesses.
At the bottom of the list were countries primarily in sub-Saharan Africa: Burkina Faso, Malawi, Mali, Zimbabwe, Ethiopia, Mozambique, East Timor, Chad, Burundi and Angola.
