LAUSANNE, Switzerland: The United States again tops the rankings in the IMD World Competitiveness Yearbook 2008, which analyses and ranks the competitive status of fifty-five national economies.
The publication, which celebrates its twentieth anniversary this year, muses as to whether 2008 and the onset of recession will see the US ceding its crown – if only temporarily.
Introducing this year's rankings, Professor Stéphane Garelli, director of the World Competitiveness Centre and a faculty member of the IMD Business School, was in apocalyptic mode.
"In 1989, when we first published our ranking on competitiveness, Japan was firmly in the number one position, while the US was third. Japan's competitiveness seemed unassailable, with a strong domination in economic dynamism, industrial efficiency and innovation.
"Then all hell broke loose: the stock market went into reverse in 1989, land prices collapsed in 1992, credit cooperatives and regional banks came under attack in 1994, large banks teetered on the edge of bankruptcy in 1997 and a major credit crunch occurred in 1998. Does this ring a bell?
"The price? The crisis in Japan spread from the stock market to real estate and then developed into a credit crunch and finally into a major crisis of the financial system. As a consequence, no bank was too big to fail!
"The resulting cost of bailing out the financial system was huge: 15% to 20% of GDP over a 10-year period. Deflation spiralled down and interest rates dropped all the way to zero. The Japanese economy stagnated for a decade.
"Frightening… Will this happen to the US? Once it starts, the logic of a financial crisis seems hardly stoppable."
Right now, however, although teetering on the brink the USA still leads the world based on the 331 criteria used by IMD to determine the rankings. The top ten nations (2007 rankings in brackets) are ...
- USA (1)
- Singapore (2)
- Hong Kong (3)
- Switzerland (6)
- Luxembourg (4)
- Denmark (5)
- Australia (7)
- Canada (10)
- Sweden (9)
- Netherlands (8)
The overall competitiveness scoreboard is calculated by combining four factors of competitiveness: Economic Performance, Government Efficiency, Business Efficiency and Infrastructure.
Data sourced from IMD; additional content by WARC staff