Global Competitiveness Index Ranking 2007-2008
Global Rankings: Who’s On Top?
By David R. Butcher
It’s irrefutable and it’s irreversible.
The worst decision regarding globalization is to ignore it.
How do today’s countries stack up against each other? Examining key factors — education, market size and efficiency, infrastructure and innovation — we look at the latest global rankings.
There are many factors that affect the ability of workers and companies in the Untied States and elsewhere to compete globally. In this context, issues are as diverse as education, immigration and trade policy, as noted in Approaches to Improve the Competitiveness of the U.S. Business Tax System for the 21st Century, a paper released last month by the U.S. Department of the Treasury.
The U.S. economy is still important to international trade and investment flows today, but not like it was 20, 10 or even five years ago. Of the 55 economies ranked by the International Institute for Management Development (IMD) in Switzerland, the U.S. still ranked No. 1 last year, closely followed by Singapore and Hong Kong.
However, IMD found 40 economies increasing or maintaining their competitiveness – Switzerland, the Netherlands, Sweden, China and Germany are on the way up – compared with the U.S. That is, they were found to be “closing the gap.” (IMD’s 2007 competitiveness “scorecard” can be found here.)
Increasingly, the ability of any company in any country to grow and prosper depends on its ability to do business globally. As we look to the future of this “globalized” economy and its workforce, we must look at our competitiveness through the lens of this global/shrinking/flat marketplace.
The World Economic Forum (WEF) recently released its Global Competitiveness Report 2007-2008, ranking 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, released in late October, were calculated from publicly available data and a comprehensive annual survey conducted by the WEF 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 WEF’s 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.
The U.S. is followed by Switzerland, Denmark, Sweden, Germany, Finland, Singapore, Japan, the United Kingdom and the Netherlands, respectively. (WEF’s Global Competitiveness Report 2007-2008 can be found here.)
Other key findings include the following:
• Chile, Mexico and Costa Rica are in the top among Latin countries;
• Israel and Kuwait are the most competitive among the Middle-Eastern nations; and
• Singapore and Japan topped the list among Asian countries.
China and India continue to lead the way among large developing economies, ranking 34th and 48th, respectively.
Despite a spate of negative press in 2007, China is close to overtaking the U.S. in manufacturing output. If it hasn’t already.
Moreover, China has taken a series of steps to shift its development base from resource and labor to technology and innovation, aiming for sustainable growth through homegrown ingenuity. And evidence of change has already surfaced. (For more on this, see today’s Superpower Tug-of-War.)
As well, India’s capital goods industries are growing rapidly, serving an expansion in infrastructure, which will support the economy in the long run. And this expansion is attracting larger inflows of foreign direct investment, according to Oxford Analytica at Forbes.
In all, according to McKinsey Quarterly’s recent Taking Stock: Ten Years After the Asian Financial Crisis, “Asia’s share of global revenues could easily rise from 20 percent in 2005 to more than 25 percent by 2015.”
Overall, the world economy is expected to keep expanding in 2008 – albeit at a slower pace. In its latest World Economic Outlook, the International Monetary Fund (IMF) projected that the 2007 global economy would grow by 5.2 percent and moderate to 4.8 percent this year, compared with last year’s 5.4 percent growth. (See Where Are We Going, Where Have We Been?)
In a December 2007 report entitled Forging New Partnerships: How to Thrive in Today’s Global Value Chain, cosponsored by the National Association of Manufacturers, The Manufacturing Institute (NAM’s research and education arm) and RSM McGladrey, Inc., 45 percent of small and midsize manufacturing executives reported that globalization is the driver most likely to influence their company’s purchasing and supplier-management strategy over the next decade.
“Traditional supply chains are morphing under the pressure of a globalizing economy,” RSM McGladrey, Inc.‘s executive vice president, Thomas G. Murphy, commented in a statement. “Manufacturers adhering to old supply-chain rules are putting their businesses in jeopardy by not adapting to new rules.”
It’s irrefutable and it’s irreversible. The worst decision regarding globalization is to ignore it.
The Global Competitiveness Report 2007-2008
by Xavier Sala-i-Martin, Michael E. Porter, Jennifer Blanke, Thierry Geiger and Irene Mia
World Economic Forum and Partner Institutes, 2007
Global Competitiveness Network: Frequently Asked Questions
World Economic Forum and Partner Institutes, 2007
IMD World Competitiveness Yearbook 2007 (WCY)
International Institute for Management Development, May 10, 2007
Approaches to Improve the Competitiveness of the U.S. Business Tax System for the 21st Century
Office of Tax Policy, U.S. Department of the Treasury, Dec. 20, 2007
China’s Economic Muscle ‘Shrinks’
BBC, Dec. 17, 2007
2005 ICP Global Results: Summary Table of Results
World Bank, 2005
India’s Economic Outlook Mixed
Oxford Analytica, Dec. 17, 2007
Taking Stock: Ten Years after the Asian Financial Crisis
The McKinsey Quarterly
Forging New Partnerships: How to Thrive in Today’s Global Value Chain
National Association of Manufacturers, The Manufacturing Institute and RSM McGladrey, Inc., Dec. 19, 2007