Home Economy WEF hails ‘dynamic’ US economy

WEF hails ‘dynamic’ US economy

FILE PHOTO: U.S. President Donald Trump gestures as he delivers a speech during the World Economic Forum (WEF) annual meeting in Davos, Switzerland January 26, 2018. REUTERS/Denis Balibouse/File Photo


The methodology shift helps the US unseat Switzerland, which has spent nearly a decade at the top of the WEF ranking

Geneva — The US has the world’s most competitive economy, a World Economic Forum ranking showed Wednesday, but inequality and health problems including obesity took a toll on its score.

“The US tops the 2018 rankings,  confirming its status of most competitive economy in the world,” the WEF said in its annual Global Competitiveness Report.

The organisation that hosts the annual Davos pow-wow of business and political elites said it used a new methodology for the 2018 edition of the report to reflect shifts in a world increasingly transformed by new, digital technologies.

The methodology shift helped the US unseat Switzerland, which had spent nearly a decade at the top of the WEF ranking. In Wednesday’s report Switzerland found itself in fourth place, after the US, Singapore and Germany.

This year’s report studied how 140 economies fared when measured against 98 indicators organised into 12 pillars, including institutions, infrastructure, macroeconomic stability, business dynamism and innovation capability.

Overall, the US  scored an average of 85.6 points when the nearly 100 indicators were measured on a scale of 0 to 100.

That is still a far cry from what WEF considers the optimal conditions for a competitive economy, but well above the global average of 60 points.

WEF hailed the US for its business dynamism and vibrant entrepreneurial culture, its flexible labour markets, the depth, breadth and relative stability of its financial system and its market size.

“They’re an innovation power house,” Saadia Zahidi, a member of the WEF’s managing board, said.  When asked if President Donald Trump could take credit for the ranking, Thierry Geiger, head of analytics and quantitive research at WEF, stressed that most of the data used in the report was from before Trump came to power last year.

“The things we capture are long-term drivers,” he told reporters.

Zahidi meanwhile warned that “there are also a lot of worrying signs” for US competitiveness.

WEF cautioned that “there are indications of a weakening social fabric … and worsening security situation”, pointing to a US homicide rate that is five times higher than the average for advanced economies.

The country also raked in a relatively low score in terms of checks and balances, judicial independence and transparency.

Zahidi also pointed to the country’s low score in terms of participation by women in the labour force, where it ranked 37th, as well as 40th place for press freedom.

Particularly worrying is the low US ranking in terms of health, the report said, blaming “the country’s unequal access to healthcare and broader socioeconomic disparities”.

The WEF said  in an e-mail to AFP that “noncommunicable diseases (such as obesity and its opioid crisis) are taking a huge toll”. In fact, Wednesday’s report found that US healthy life expectancy — the number of years a newborn today can expect to live in good health — ticks in at just 67.7 years in the US.

That is lower than in Sri Lanka and China and three years below the average in advanced economies. It is a full six years behind Singapore and Japan, the report found.

The WEF report also cautioned that the US rate of adoption of information and communications technologies was fairly low compared to other advanced economies.

WEF founder Klaus Schwab said understanding and being open to the technologies driving the  fourth industrial revolution was vital to a country’s competitiveness.

“I foresee a new global divide between countries who understand innovative transformations and those that don’t,” he said in a statement.

Zahidi however stressed that “technology is not a silver bullet on its own”.

“Countries must invest in people and institutions to deliver on the promise of technology.”




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