For the 15th straight year, the United States took first place in a competitiveness study conducted by Switzerland-based IMD business school. While the U.S. retained its top spot, project director Stephane Garelli noted that “Everyone is catching up very quickly…” and questioned whether the U.S. “…will be No. 1 after this year.” CNN:
The study lists 55 economies according to 331 criteria that measure how the nations create and maintain conditions favourable to businesses.The U.S. position was cemented by its domestic economy, which is the world’s strongest, topping all others in its amount of investments, stock purchases and commercial service exports. The U.S. also ranks as the easiest place to secure venture capital for business development and dominates all other economies in key technology criteria such as computers in use, according to the report.
While the U.S. economy maintains most of these advantages, cracks are beginning to appear, just as they did in Japan before its long decline in the 90’s:
U.S. economic health is vulnerable because of its heavy reliance on the financial sector for corporate profits.The 2008 report says there are parallels between now and two decades ago, when the business school first started to study competitiveness and “Japan’s competitiveness seemed unassailable, with a strong domination in economic dynamism, industrial efficiency and innovation.”
“Then all hell broke loose,” it added. “The stock market went into reverse in 1989, land prices collapsed in 1992, credit cooperatives and regional banks came under attack in 1994, large banks teetered on the edge of bankruptcy in 1997, and a major credit crunch occurred in 1998. Does this ring a bell?”
Don’t expect the US to collapse the same way that Japan did, though. Japan’s bureacrats were not quick enough to provide stimulus to the ailing economy and triggered a deflationary spiral by refusing to cut rates. U.S. legislators and bankers (for better or worse) have exactly the opposite instinct.