U.S. Global Business Competitiveness – Where We Rank

By Brian T. Lynch

November 24, 2012

The World Economic Forum published a study on global business competitiveness that ranks 144 nations according to indicators in 12 categories. The categories  and where the United States rank are:

              CATEGORY                                                RANK

                                                                             (OUT OF 144)

1.      Institutions                                               42

2.      Infrastructure                                           14

3.      Macroeconomic Environment               111

4.      Health and Primary Education                 34

5.      Higher Education and Training                  8

6.      Goods Market Efficiency                          23

7.      Labor Market Efficiency                              6

8.      Financial Market Development                16

9.      Technological Readiness                          11

10.  Market Size                                                   1

11.  Business Sophistication                            10

12.  Innovation                                                     6

Overall, the United States is very competitive, ranking 7^th out of 144 nations.  This is a decline from last year, however, when we were 5^th out of 142 countries.  Major reasons for the overall low marks can be found in our Macroeconomic situation, primarily our  government budge imbalance and huge national debt on which we were ranked 140^th and 136^th respectively .  Our gross national savings is also very low, with a rank of 114^th in the world.  Still, confidence in America’s credit rating remains high, 89.4%, or 11^th among the nations. 

Looking at our strengths and weaknesses, in the Institutions category our top ranking was 5^th in investor protections.  Our next highest rankings were in efficiency of corporate boards (23^rd), intellectual property protection and ethical behavior of firms (both ranked 29^th).  Our lowest ranking was on the business cost of terrorism (124^th). Next lowest rankings were in the business cost of crime and violence, and the business cost of organized crime (86^th and 87^th).

We did better in Infrastructure.  We ranked 1^st in available airline seats and 15^th in telephone land lines.  Interestingly, mobile phone subscriptions were our lowest indicator (72^nd) followed by the quality of our electric supply (33^rd in the world).  Our transportation infrastructure didn’t fair much better (30^th).

In the category of Health and Primary Education we had no malaria impact on businesses (1^st) but the prevalence and business impact of HIV was high ranking the US 92^nd and 90^th in the world.  Also surprising was our low ranking on primary school enrollments (58^th), infant mortality (41st) and the quality of our primary education (38^th).

In Higher Education and Training we are doing well in post-secondary education (2^nd) and the availability of research and training opportunities (9^th).  We ranked 47^th in secondary school enrollment and the quality of our math and science education. 

In Goods and Market Efficiency we rank 9 and 10 in market dominance and buyer sophistication.  Our worst ranking is on the business tax rate to profit ration (103^rd).

In the area of Labor Efficiency we apparently have the lowest labor redundancy costs in the world.  This variable estimates the cost of advance notice requirements, severance payments, and penalties due when terminating a redundant worker. We also ranked 5^th in the brain drain measure and 8^th in the efficiency of our hiring and firing practices.  Our low rankings here were in the women to men ratio in the work force (we ranked 44^th) and our cooperation in labor-employer relations (42^nd) , perhaps no surprise give our ease and thrift in firing people).

In the Financial Market Development category we are very competitive in the availability of venture capital (10^th) but weak on the strength of our banking institutions (80^th).  Regarding the regulation of security and exchange, we also ranked low (39^th) although it is unclear if this means we are over or under regulated. 

In the area of Technological Readiness we ranked 8^th in the number of internet subscribers yet 20^th in the percentage of individuals using the internet.  We rank lowest, (43^rd) on foreign direct investment and technology transfer.

Market Size, we remain number one in domestic market size (we buy more things) and number two in foreign market size.

In the category of  Business Sophistication we are third in the extent of marketing and ranked in the low teens on other measures, such as production process (13^th) and local supplier quality/quantity (14^th).   

When it comes to Innovation, The United States is still doing very well.  We are ranked in the single digits on most measures, including University-industry collaboration in R&D (3^rd), Availability of scientists and engineers (5^th), Quality of scientific research institutions (6^th), Capacity for innovation and Availability of scientists and engineers (both ranked 7^th).  Our lowest ranking in this area was in government procurement of advanced tech products (15^th).

Read more at:   http://reports.weforum.org/global-competitiveness-report-2012-2013/