Strengthening American international competitiveness involves more than just spending and tax policy. A few weeks ago a national survey that found a majority of small businesses owners think countries like India and China have friendlier business climates than the U.S. A new study from the Mercatus Center finds that we can no longer ignore the impact of government regulation as well. Looking at 20 years of data from industrialized Organization for Economic Co-operation and Development (OECD) countries, Mercatus scholars find:

– American productivity growth is still stronger than all other OECD countries, but our advantage has been narrowing over the past 5 years. 

– In 2008, the U.S. ranked first in technological innovation, but as of 2011 two other OECD countries rank higher, and one country tied with us.

– As of 2011, 14 of the 17 other OECD countries were ranked higher than the U.S. in terms of property rights protection, compared to 2005 when only two countries ranked higher.

– In terms of business freedom, only one country ranked higher than the U.S. in 2005, plummeting to eight countries ranking higher in 2011.

– Back in 2005 the U.S ranked first in financial freedom, encompassing banking efficiency and independence from government interference and control. In 2011, nine other OECD countries ranked higher than the U.S.  

Finding like these led Mercatus scholars to conclude:

The available evidence indicates that U.S. international competitiveness has deteriorated by certain measures and suggests that future—and potentially more economically significant—declines may be anticipated. Evidence also identifies deterioration in the U.S. regulatory environment relative to other developed economies…other evidence suggests that the increasingly complex, uncertain and costly regulatory regime in the United States has harmed the performance of the U.S. private-sector relative to other countries.