Geneva: Regulated European and Asian countries topped the World Economic Forum’s 2008 Global Competitiveness Index on Wednesday, as the financial crisis started to take its toll on economies.
The survey was conducted between January and May this year, so the index does not reflect the latest developments in the financial crisis. But Jennifer Blanke, senior economist of the forum, said the index aimed to take a longer-term view, and on that basis the United States’ ranking was fully justified.
The United States remained in first place in the index, its flexible labour markets and innovative businesses well positioned to help it out of the global financial crisis.
But Britain, where the financial sector plays a bigger role, dropped out of the top 10 to rank 12th, while relatively regulated economies like Switzerland, Denmark, Sweden, Finland, Germany and Japan all featured in the top 10.
The index is produced each year by the World Economic Forum, which organizes the annual Davos meeting of business and political leaders.
Index measures productivity and not just market share
This year the index, combining economic data with a survey of business executives, covers 134 economies. Economies are assessed according to 12 “pillars” of competitiveness, ranging from infrastructure and macroeconomic stability to business sophistication and innovation. These are weighted for each economy to reflect their stage of development.
The aim is to assess the factors that determine productivity rather than simply measure market share, the forum says.
Forum researchers acknowledge that as in any such exercise, the data are not always up to date, and the survey can be subjective. But the index is closely followed by governments and by companies planning foreign investments.
Blanke, justifying issuing the index at a time of financial market turmoil, told a briefing “We are looking at structural factors. We are not looking at the business cycle and we’re also not necessarily looking at shocks, as big as they are.”
China, Russia, Brazil moved up while India dropped two places
China continued to climb this year, up four places to 30, helped by its large market and strong economic performance, but held back by underdeveloped financial markets, the forum said.
Russia also rose sharply, climbing seven places to 51, its big market and oil-fuelled economic performance outweighing institutional weaknesses.
Brazil also rose sharply. But among other big emerging economies, India slipped two places to rank 50 with economic problems and unequal access to health and education outweighing the size of its markets and its business sophistication.