Coming Up Fast On The Outside
Which nations are likely to make the most economic progress in the decade ahead? Some of the answers, according to an index devised by Union Bank of Switzerland economists, may come as a surprise. The leading candidate, says the bank, is Singapore, but the top 7 out of 40 countries ranked (Hong Kong and Taiwan are omitted because of incomplete data) include not only Japan and Asia's fastest-growing economies but also little Ireland.
To be sure, the bank notes that the U.S. is still No.1 in current economic competitiveness--measured by per capita output in purchasing power terms. And other major industrial nations remain in the front of the pack. Among the Group of Seven, the second-highest is Canada, with an estimated 83% of U.S. per capita output, followed by Japan's 82% and France's 78%.
But the most dramatic recent improvement in the past decade was posted by Singapore, where per capita income grew from 56% of the U.S. level in 1985 to 88% in 1995--surpassing Japan and most European nations. Indeed, because they have failed to keep pace with U.S. economic restructuring, a number of leading industrial nations have lost relative ground in recent years.
Looking ahead, the bank's criteria for its future competitiveness index range from high national savings and research outlays to fast export growth, stable inflation, and low government spending. By such measures, nations from East and Southeast Asia top the index (chart). In fact, if recent trends continue, the bank calculates that Singapore would soon surpass the U.S. in per capita output--as would other Asian Tigers, Japan, and even Ireland and Chile by 2010.
The caveat, adds the bank, is that "the catch-up itself will alter these trends," as the Tigers are likely to encounter higher labor costs and other problems bedeviling traditional industrial nations. Still, the fast economic progress chalked up by a number of nations and their high competitiveness ratings suggest that America's lead will inevitably dwindle.