Arnold Kling  

Global Competitiveness?

The Virtual Handshake... From Far Left to Libertarian...

The World Economic Forum writes (in its executive summary),

Switzerland takes the leading position as the world’s most competitive economy in 2006–2007, overtaking Finland and Sweden, and replacing the United States, which dropped to sixth position. Switzerland’s top ranking reflects a combination of a world class capacity for innovation and the presence of a highly sophisticated business culture.The country has a well developed infrastructure for scientific research, with close collaboration between the leading research centers and industry. Companies spend generously on research and development. Intellectual property protection is strong and this has helped spur high levels of technological innovation, as measured by per capita patents registration, for which the country is ranked sixth in the world. Business activity in the country benefits from a well-developed institutional framework, characterized by respect for the rule of law, an efficiently working judicial system, and high levels of transparency and accountability within public institutions. Flexible labor markets and excellent infrastructure facilities are two healthy features of the business environment.

This is an interesting set of measures to examine. However, I dislike the term "global competitiveness," because that term typically is used to suggest the ability to export manufactured goods. It is used by manufacturers in countries to rally support for subsidies. My instinct is to say that trade depends on comparative advantage, not something called "global competitiveness." I am usually against any policy enacted in the name of "global competitiveness."

I am not so opposed to what the authors are trying to do with this report. I think what they have in mind is a notion of "institutions for sustainable growth." We can disagree about what those institutions consist of. But it's a reasonable thing to talk about, unlike "global competitiveness."

COMMENTS (5 to date)
dearieme writes:

Do you happen to know when the absurd expression "executive summary" was introduced, by whom, and why?

Slavisa writes:

But if you are trying to gather ALL factors that are conducive to growth, aren't you being tautological? Wouldn't a simple look at growth rates give you the same and even better information on who is "competitive" and who is not?

This year they apparently changed the methodology, trying to capture more factors. In the end when they capture them all, hypothetically, they won't need to measure competitivness anymore - it will be all embedded in growth.

FDI writes:

This publication, along with the IMD World Competitiveness Yearbook, are very handy in the field of (foreign) investment promotion and attraction. Here in this national investment agency we're very much opposed (as an organisation) to trade barriers. So, rather than focusing on exports of manufactured goods, we simply use the range of data to benchmark "our" country against others. Skills availability, productivity and economic growth / stability are the big issues for us.

I could be mistaken but I would have thought that this use of the GRC would be more common than in finding rent-seeking opportunities.

lexspoon writes:

This is a startling conclusion.

I am living in Switzerland, in the French part, after spending most of my life in South Carolina and Georgia. Things do not look economically impressive at all. Economic issues went MUCH more nicely in my US experience than here.

Prices are about 50% higher, including for food. Restaurants are maybe double the price. Just to give you some ideas:

  • A pound of hamburger meat: $8
  • The cheapest electric coffee maker you can find: $45
  • McDonalds value meal: $10

  • Shopping for housing is misery. You can do it in 3-4 weeks, minimum, if you accept the first apartment that will take you. If you have standards for where you live, expect to spend more time on it. This is a wild change from Atlanta, where you can drive to any residential area and find multiple apartments you can rent on the spot.

    You cannot do ANYTHING without a permit. You have to file papers to own a radio. You cannot give driving lessons without a permit.

    There is required insurance for everything. Arnold, that includes health care--it's private but mandatory. It also includes renting and owning a bicycle. That's right: you cannot legally pedal down the road unless your bike is insured.

    I'll give only two things on the flip side. First, everything IS available, only more costly and it takes longer to obtain. Second, once you have paperwork for something, the officials do not continue to hassle you.
    This second sounds like faint praise to me, though -- you operate smoothly, but only if you operate exactly in the standard way? How, then, do you start a company that is innovative in some way?

    Overall, the country strikes me as economically functional but nowhere near the agility of the United States. The ranking must be in some weird way. For example, I'm just a small fry--maybe they are talking about the perspective of mega-uber companies like Nestle?

    Shayne writes:

    To: dearieme:

    Re: The source of the "Executive Summary"

    The Executive Summary was invented by the first researcher (circa, 2923 bc) who, after beavering away through months of extensive and thorough investigation of a problem and producing a 200 page tome documenting the results (details, as well as options/recommendations), realized that no one who had originally commissioned said document ever read it. Instead, the commissioners demanded a 10 minute presentation of the study.

    Additional historical information on the "Executive Summary":
    1.) The Executive Summary is always to be placed at the beginning of the document so as to spare the commissioners of the research from having to turn pages as well as read the document.
    2.) The Executive Summary should list significant findings as separate items, such that individual findings can be taken completely out of context of the full research and used as "talking points", "sound bites", etc. and used to support the individual agendas of the individual commissioners.
    3.) The Executive Summary should also be prefaced by a discussion of why the research was undertaken in the first place, generally offering high praise for the commissioners for having the insight to sponsor the effort.

    (Responders Note: "absurd" is a very harsh term to apply to such a valuable and historically significant concept as the Executive Summary.)

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