U.S. Competitiveness Drops for Third Year; Swiss Remain on Top

The U.S. extended its slide in competitiveness for a third year by slipping to fifth in the World Economic Forum’s rankings, which Switzerland topped.

The U.S. fell one place, two years after losing the No. 1 position for the first time since the Geneva-based organization began its current index in 2004. Concern about public debt and deteriorating confidence in policy makers hurt the efficiency of the world’s largest economy even as faith in its financial industry rebounded, the forum said in its study of 142 nations.

In the U.S., “urgent efforts need to be made in terms of macroeconomic stabilization and mapping out an exit strategy from debt,” said Jennifer Blanke, the forum’s lead economist who contributed to the annual study.

The loss of America’s competitiveness poses another challenge to economic recovery as President Barack Obama prepares to address a joint session of Congress on his plans to increase U.S. jobs. Data last week showed the productivity of U.S. workers fell more than previously estimated in the second quarter and the labor market stagnated in August.

Switzerland, home to companies including drugmaker Novartis AG (NOVN) and food company Nestle SA (NESN), was credited for its innovation and technological skills. Singapore and Sweden trailed, with Finland leapfrogging the U.S. into fourth place. Germany, the Netherlands and Denmark followed with Japan sliding three places to ninth. The U.K., ranked 12th last year, swapped places with Canada to take 10th.

Gaining Ground

The report also suggested emerging markets are catching up with their richer counterparts. China climbed one level to 26th and Brazil rose to 53rd from 58th while India fell five slots to 56th and Russia dropped to 66th from 63rd.

“You’re seeing a convergence by the emerging economies in terms of competitiveness,” Blanke said.

The U.S. ranked 89th for macroeconomic stability amid a record budget deficit, while running 50th for trust in its politicians, the forum said. The survey suggested its government wastes resources and regulation has become more burdensome. A gauge of financial-market development indicated improvement, with the U.S. rising to 22nd from 31st last year. It was ninth in 2008.

Switzerland, which is struggling to cope with a surging currency, was also hailed for its efficient labor market and transparent government. Its infrastructure and financial markets are also sound, the WEF said.

Portugal, Italy Rise

Among the other Group of Seven economies, France slipped three places to 18th in terms of competitiveness and Italy rose to 43rd from 48th. Of the European nations requiring bailouts, Ireland held 29th position, Portugal advanced one slot to 45th and Greece dropped to 90th from 83rd.

In Latin America, Chile was the highest-ranked country at 31st and South Africa, 50th, was the best performer in its region. In the Middle East, Qatar was the strongest nation, at 14th. Chad was again ranked bottom of all the countries studied.

The report -- published each year by the organizers of the annual conference of business leaders, politicians and entertainers in Davos, Switzerland -- is based on measures of competitiveness and an opinion poll of more than 14,000 business leaders.

To contact the reporter on this story: Simon Kennedy in London at skennedy4@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net

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