Survey gauges countries’ clout in competition

Washington Times special correspondent John Zarocostas in Geneva, Switzerland, interviewed Stephan Garelli, professor at the Lausanne-based international Institute for Management Development (IMD), by telephone Friday on the findings of the institute’s “World Competitiveness Yearbook 2005,” published last week.

Question: What are the factors driving global competitiveness in the 21st century?

Answer: Well, basically we are looking at 60 economies around the world, and we definitely see that one of the factors driving competitiveness is the ability to use technology efficiently, and the ability to develop an infrastructure that supports the efficient use of technology.

Regarding infrastructure, we are not only looking at traditional infrastructure, but also education, research and development, and finally, one very interesting factor we see is the ability to ease the way of doing business.

I think we are living in a world that is more and more complex, and some of the winning nations have developed very good policies to lead business and fight complexity.

Q: Your survey ranks the top 60 economies worldwide based on 314 criteria and on a poll of more than 4,000 senior executives. What are the most salient factors?

A: Two-thirds of our criteria are hard data; namely, statistics gathered by international organizations, and also by the 60 partner institutes that are working with us on the report. The remaining third comprises responses to an opinion survey around the world.

In these parts, which are really about competitiveness, which is measured, we see really a lot of changes, mainly in economic growth. For the first time last year, we have seen that of the 60 economies that we have been looking at, 40 had a growth rate above 3 percent, which is quite significant. It was the best year since 2000. So everybody has had a relatively good year.

And we have seen also a very significant development in international investment. Flows have increased dramatically. Of course, a lot are going to Asia, to China, where the economy grew at 9.5 percent last year. But have also seen a lot of investment going to the United States — maybe because with the dollar being relatively weak, investing in the U.S. today is perceived as a very good decision, because assets are relatively cheap.

Regarding perceptions in the opinion survey, it seems that more and more, the quality of the education system seems to be at the forefront of concerns among business people — probably because in a knowledge economy, you need to have skilled people.

Q: The United States has again been ranked No. 1. What are the main factors keeping the U.S. at the top?

A: I think one of the essential competitive advantages of the U.S. is not only the ability to develop technology, but to rapidly transfer new technologies into the private sector and apply them to products and services. I think this is probably the biggest difference between the United States and Europe.

In Europe, we have a tendency to develop a lot of innovations, but keep them in research institutes or in laboratories. In the U.S., there is this unique ability to develop technology and put it very quickly into enterprise. Entrepreneurs are very often people who have invented something, and I think this is the key competitive advantage of the United States.

The second aspect is, of course, that the U.S. has wonderful mobility in terms of people. I think it’s quite impressive to see how quickly Americans move from one region to another one in the United States — and from one cluster of competitiveness to another. I think this combination of technology and mobility is really one of the key aspects explaining the success of the U.S. today.

Q: One of the world’s most dynamic economies, China’s, dropped sharply in the 2005 rankings from 24th to 31st. Would a possible revaluation of the yuan affect its competitiveness even more, or not?

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