Despite the shaky underpinnings and dire economic climate, the U.S. still ranks ahead of the other nations in competitiveness, though economists see thorny challenges ahead.  On the plus side, the U.S. still brings a lot in the area of production potential, well-functioning labor markets, sophisticated businesses, academic leadership and technological innovation.  

While these are sustainable virtues, the U.S. has its work cut out to stay on top as other countries take steps to improve their competitiveness (see Fareed Zakaria’s seminal The Post American World).  Globalization is leading to the “Rise of the Rest”. This pattern has been evident to anyone involved in business dealings across markets over the last decade.   

The report had few surprises. A notable exception is that the UK slipped (from 9th last year to 12th) due to its heavy reliance on a flagging financial services sector. 

Singapore, the Scandinavian nations and Switzerland have been perennial leaders for several years. And it isn’t surprising that the Gulf nations are on the rise due to worldwide demand for hydrocarbons coupled with concerted economic reforms.

Fiinally, some sub-Saharan nations are making headway though, as a region, it still lags behind.  These economies have had 5-6% annual growth rates and relatively low inflation in recent years.  But their infrastrusctures are fragile and they may be hit hard by a global slowdown.    

The WEF report is a lagging indicator of the strengths and weaknesses of global economies.  For example, it doesn’t take into account the prospects of a global slowdown which reduces the demand for resources. 

The take away is that governments play a substantial role in shaping a nation’s long-term capacity to compete in an increasingly global and crowded world.  Good governance rules.

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