The U.S. has slipped from first to third place in global competitiveness.
That is the finding of the IMD World Competitiveness Center, which is based in Switzerland. We now lag behind aHong Kong and Switzerland. The Washington Times notes:
Hong Kong was praised for its low tax base, lack of capital controls and its position as a gateway for investment into the Chinese mainland.
The sheer size and scope of the American economy were no longer sufficient to keep it at the top of the closely-watched global ranking, Arturo Bris, director of the IMD center, said.
“The U.S. still boasts the best economic performance in the world, but there are many other factors that we take into account when assessing competitiveness,” Mr. Bris said in releasing the survey Monday. “The common pattern among all of the countries in the top 20 is their focus on business-friendly regulation, physical and intangible infrastructure and inclusive institutions.”
The top ten economies are Singapore, Sweden, Denmark, Ireland, the Netherlands, Norway and Canada and Ireland. Ireland moved up nine places from last year's ranking.
IMD uses 340 criteria in judging an economy, including government policies, efficiency of the private sector, and the condition of the nation's infrastructure. A Forbes magazine report on the new rankings contained this observation about countries that have moved up dramatically in the rankings:
Much of that [movement up in rankings] specialization is in the IT sector. Hungary, for example, has given fiscal incentives to the IT business community, says [Professor Arturo Bris, director of the IMD World Competitiveness Center. ]. “In Hungary, if you are an IT professional, you don’t pay income taxes—same thing in Estonia or Lithuania.” Professionals in Eastern European nations, he added, have played a role in innovations by companies like WhatsApp and Spotify.
One might conclude from this that lower taxes spur economic growth, while higher taxes do just the opposite.