- The Washington Times - Tuesday, September 26, 2006

GENEVA (AP) — U.S. economic competitiveness fell significantly over the past year, as high budget and trade deficits hurt the nation’s business environment, according to a survey released yesterday by the World Economic Forum.

The disappointing response to Hurricane Katrina, government corruption and a decreasing talent pool for employment because of immigration restrictions were other factors cited by the forum, which moved the United States to sixth in its “global competitiveness index” from the top spot a year ago.

“While strengths in the technological and market efficiency sectors explain the country’s overall high rank, the U.S. economy suffers from striking weaknesses,” the report said.

The United States’ huge defense and homeland security spending commitments, plans to reduce taxes further, and long-term potential costs from health care and pensions were creating worrisome fiscal strains.

“With a low savings rate, record-high current account deficits and a worsening of the U.S. net debtor position, there is a non-negligible risk to both the country’s overall competitiveness and, given the relative size of the U.S. economy, the future of the global economy,” it said.

Switzerland topped the poll, which was conducted for the 27th consecutive year, but only the second year using a new formula, the forum said.

More than 11,000 business leaders in 125 countries took part in the survey, which found that the Alpine nation’s institutional environment, infrastructure, efficient markets and high levels of innovation made it the world’s most competitive business environment. It ranked fourth a year ago.

“The country has a well-developed infrastructure for scientific research, companies spend generously on [research and development], intellectual property protection is strong, and the country’s public institutions are transparent and stable,” the forum said.

Nordic countries — traditionally strong in the survey — took the next three places, with Finland, Sweden and Denmark all praised for running budget surpluses and having low levels of public debt. The forum also lauded the high quality of education and social services in these countries. Singapore was fifth ahead of the United States.

Rounding out the top 10 were Japan, Germany, Netherlands and Britain.

The aim of the survey, the World Economic Forum says, is to examine the range of factors that can affect an economy’s business environment and development as it seeks to maintain economic growth — including the levels of judicial independence, protection of property rights, government favoritism in policy-making and corruption.

Emerging economies such as China and India fared modestly.

At the bottom of the list were countries primarily in sub-Saharan Africa: Burkina Faso, Malawi, Mali, Zimbabwe, Ethiopia, Mozambique, East Timor, Chad, Burundi and Angola.

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