The United States has jumped six places to retake the top spot in an annual ranking of global competitiveness by the World Economic Forum, followed by Switzerland, Denmark, Sweden and Germany, respectively.

The World Economic Forum's new Global Competitiveness Report 2007-2008 ranks the competitiveness of 133 countries based on macroeconomic and institutional factors, health, education, market (labor/product/financial) size and efficiency, infrastructure, business and technological development. The rankings are calculated from publicly available data and a comprehensive annual survey conducted by the World Economic Forum together with its network of Partner Institutes (leading research institutes and business organizations) in the countries covered by the report. This year, more than 11,000 business leaders were polled in a record 131 countries, accounting for more than 98 percent of the world's GDP.

While the U.S. tops the rankings due to high productive and innovative capacity, a large domestic economy and strong research affiliation between universities and businesses, the report notes that present macroeconomic and institutional trends — such as fiscal and trade deficits, public debt, the weakness of the dollar and the role of private sector in policy-making — are matters of concern.

"This danger has most recently been demonstrated by the fallout and contagion caused by the country's sub-prime mortgage crisis and the ensuing global credit crunch," Xavier Sala-i-Martin, professor of economics at Columbia University and co-editor of the report, said in a statement.

The U.S. is followed by Switzerland, Denmark, Sweden, Germany, Finland, Singapore, Japan, the United Kingdom and Netherlands, respectively. (Complete rankings here)

Additional key findings include the following:

• Singapore and Japan topped the list among Asian countries;
• Chile, Mexico and Costa Rica are in the top among Latin countries;
• Israel and Kuwait are the most competitive among the Middle-Eastern nations;
• Sub-Saharan countries performed very low in the ranking.

China and India continue to lead the way among large developing economies, ranking 34th and 48th, respectively. While China has advantages like large domestic and foreign markets, it needs to improve its education system and the quality of institutions and financial markets, according to the report. Meanwhile, although India has improved market efficiency, business environment and innovation, it needs to address problems related to macroeconomic stability, infrastructure and access to health and education, the report notes.

Emphasizing the impact — and importance — of today's shrinking/flat/globalized world, the report notes: "Globalization has increased the returns to productivity and also the costs to low productivity." The report goes on to say, "Cooperation among neighboring countries is an important tool to improve business environment, trade and investment."

In another new study, in which 150 countries are ranked in a set of indicators to gauge international competitiveness, the World Bank pinpoints the places where it is easy or difficult to ship goods across countries, into and out of ports, and over borders.

The Logistics Performance Index (LPI) and accompanying study, Connecting to Compete: Trade Logistics in the Global Economy, find that the countries with the most predictable, efficient and best-run transportation routes and trade procedures are also the most likely to take advantage of technological advances, economic liberalization and access to international markets.

According to the World Bank study, Singapore, a major global transport and logistic hub, ranks first. On the other hand, low-income countries — "particularly those landlocked in Africa and Central Asia" — are on the other extreme.

Of the total 150 countries covered in the report, all developed countries turned out to be top performers. Among the seven most industrialized nations, here are some key rankings:

• Germany comes in at #3;
• Japan at #6;
• U.K. at #9;
• Canada at # 10;
• U.S. at #14;
• France at #18; and
• Italy ranks at 22nd.

China and Chile rank 30th and 32, respectively.

Countries with "higher overall logistics costs are more likely to miss the opportunities of globalization," the study's lead authors Jean Francois Arvis and Monica Alina Mustra of the Bank's Poverty Reduction and Economic Management (PREM) group said in a statement yesterday.

Resources

The Global Competitiveness Report 2007-2008
World Economic Forum, Oct. 31, 2007

The U.S., Switzerland, Denmark and Sweden Take the Lead in Rankings of the World Economic Forum's Global Competitiveness index
World Economic Forum, Oct. 31, 2007

New Index Measures Countries' Ability to Connect to Global Markets
World Bank, Nov. 5, 2007

Logistics Performance Index
World Bank, 2007

Countries Need Better Trade Logistics to Compete, Reports New World Bank Study
World Bank, Nov. 5, 2007