The World Economic Forum says in a new report that the U.S. is once again the world's most competitive economy, and has the best prospects for growth in the near future. The forum's annual report on global competitiveness says that among the emerging economies of the former communist states, the Baltic countries and Slovenia have performed well, while Russia has yet to become competitive, in spite of its huge economic potential.
Prague, 14 November 2002 (RFE/RL) -- The World Economic Forum (WEF) says the U.S. has regained its position as the world's most competitive economy and has absorbed the impact of the 11 September terrorist attacks reasonably well.
The Geneva-based group said in its annual "Global Competitiveness Report 2002-2003" this week that the U.S. -- among advanced countries -- has the best prospects for growth over the next five to eight years.
The report evaluates 80 countries in terms of what it calls "growth competitiveness" and "microeconomic competitiveness." For growth competitiveness, the report looks at technology and the quality of public institutions. Microeconomic competitiveness measures how well a country uses its resources.
The WEF report says that since last year, the U.S. has swapped places with Finland for the top ranking in both categories.
In terms of growth competitiveness, Taiwan is ranked third, followed by Singapore, Sweden, and Switzerland. In microeconomic competitiveness, Britain comes third, followed by Germany, Switzerland, and Sweden.
Professor Michael Porter of Harvard Business School, who contributed to the report, announced the findings. "We found that among the advanced countries, the U.S. actually regained the top spot. The last few years Finland had actually been the top-ranked country. U.S has taken the lead from Finland has moved to No. 2."
The World Economic Forum is an independent organization funded by some 1,000 global companies and is best-known for its annual gathering in Davos, Switzerland.
The WEF said that among Europe's former communist countries, only the Baltic States and Slovenia were able to improve their growth competitiveness rankings. Estonia moved up three positions to 26th, followed by Slovenia at 28th. Lithuania rose seven notches to 36th.
WEF chief economist Peter Cornelius says the three Baltic countries are particularly well advanced toward transforming their economies toward market-oriented ones. He says foreign direct investment and technology advances have considerably helped the Baltic states improve their competitiveness.
But Cornelius told RFE/RL that the government has also played a crucial role in the countries' progress: "I think [political will] has played a very important role really. I think it's critical that the authorities are behind the transformation process and hold steadfastly to the transition. I think the governments in Estonia, Latvia, and Lithuania have shown how important it is that even under difficult circumstances there is a strong commitment in favor of economic reforms. I think that is critical."
At the bottom of the list, Ukraine and Romania were the lowest-ranked former communist countries, placing 77th and 66th respectively. Romania fell 10 places since last year. Bulgaria dropped three positions to 62nd. Russia is ranked at 64th, falling one notch since last year.
Among the region's more advanced economies, Poland dropped 10 positions to 51st, while Slovakia dropped nine to 49th. The Czech Republic fell to 40th from 37th.
The report also highlighted the growing gap in competitiveness among the 15 European Union member states. Finland and Sweden have in general been successful, while France, Italy, and Greece have tended to lag.
Cornelius said: "What we see within the European Union is an increased degree of variability. Some countries, Finland and Sweden in particular, are very innovative, they operate at the global frontier of innovation, are very competitive, and others seem to be falling behind. This group includes Italy, Greece, and, also, France."
In terms of microeconomic competitiveness -- or how well a country makes use of its resources -- Porter singles out Russia, which ranked 58th. He explained: "The productivity of the economy, the quality of the local inputs, the nature of the administrative processes, the intensity of competition, the quality of corporate governance, all these things are very weak. Russia has an extremely high position in terms of scientists and engineers. It could be a place where a lot of innovation happens. It could be a place that achieves quite high levels of productivity given so many underlined conditions. The technological foundations were there, and that usually takes many decades to build if you are a developing country. But unfortunately, there are so many weaknesses -- administrative infrastructure, capital markets, level of competition -- so many weaknesses in the microeconomic side that haven't yet been addressed that Russia is now ranked quite low."
Haiti, the poor Caribbean nation, placed last in both categories.
(The report can be viewed on the Internet at http://www.weforum.org)