The US has topped the World Economic Forum’s competitiveness rankings, ahead of Switzerland and the strong-performing Nordic economies.

The Global Competitiveness Report 2007-2008 cites the country’s “combination of sophisticated and innovative companies operating in very efficient factor markets… buttressed by an excellent university system and strong collaboration between the educational and business sectors in research and development”.

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Chile is the highest ranked country in Latin America, followed by Mexico and Costa Rica. China and India continue to lead the way among large developing economies. Several countries in the Middle East and north Africa region are in the upper half of the rankings, led by Israel, Kuwait, Qatar, Tunisia, Saudi Arabia and the United Arab Emirates.

In sub-Saharan Africa, only South Africa and Mauritius feature in the top half of the rankings, with several countries from the region positioned at the very bottom.

“The US confirms its position as the most competitive economy in the world. The efficiency of the country’s markets, the sophistication of its business community, the impressive capacity for technological innovation that exists within a first-rate system of universities and research centres, all contribute to making the US a highly competitive economy,” said Xavier Sala-i-Martin, professor of economics at Columbia University and co-editor of the report.

“However, some weaknesses, particularly related to macroeconomic imbalances, continue to present a risk to the country’s overall competitiveness potential, and to the global economy as a whole. This danger has most recently been demonstrated by the fallout and contagion caused by the country’s subprime mortgage crisis and the ensuing global credit crunch.”

The rankings are calculated from both publicly available data and an annual executive opinion survey designed to capture a broad range of factors affecting an economy’s business climate.

 

Five nations hog R&D league

World research and development (R&D) spending continues to be dominated by companies registered in just five countries: the US, Japan, Germany, France and the UK, according to the R&D Scoreboard, an annual international league table of R&D active companies.

The five countries contributed 81% of the R&D done by the top 1250 global firms.

The R&D Scoreboard is produced by the UK government and contains details of the R&D and capex investments, sales, profits, employees, growth rates, market capitalisation and key ratios of the top 1250 international companies (those with R&D budgets of more than £18.5m) as well as the top 850 UK R&D-active companies (R&D spend of more than £480,000).

R&D investment in the global pharmaceuticals sector grew by 16% in the past year; it has replaced technology hardware (which grew by 13%) as the largest global R&D sector. The software and aerospace & defence sectors both grew by more than 12% – higher than the global average.

 

Investors look for stability

Macroeconomic and political stability are the most important location factors, according to the Worldwide Survey of Foreign Affiliates conducted by the United Nations Conference on Trade and Development and the World Association of Investment Promotion Agencies.

While generally optimistic about the future prospects of more investment in their respective host countries, executives of foreign affiliates also stressed the importance of access to skills, low corporate income taxes and high-quality telecommunications.

Most respondents called for policy improvements in the regulatory and institutional environment. They also called for lower taxes.

The survey polled 96 CEOs of foreign affiliates from February to April 2007.