GENEVA, Switzerland - The U.S. economy maintained its position atop world competitiveness rankings despite a record trade deficit, its high corporate tax rate on profits, and low confidence in the government's handling of public finances, according to an annual survey released yesterday.
Singapore was ranked just behind, with Hong Kong, Luxembourg and Denmark rounding out the list of the five most competitive national economies, said the IMD business school in Lausanne, Switzerland, which publishes the World Competitiveness Yearbook.
The study lists 55 economies according to 323 criteria that measure how nations create and maintain conditions favorable to businesses.
Project director Stephane Garelli said the U.S. position was cemented by the dynamism of its financial market, which drives what is the world's strongest domestic economy, topping all others in its amount of investments, stock purchases, and commercial-service exports.
The United States also ranked as the easiest place to secure venture capital for business development, and it surpassed all other economies in key technology criteria, such as computers in use and high-tech exports, according to the report.
But Garelli said the U.S. economy had been hurt by the nation's record trade deficit, which, combined with the budget deficit, brings the national debt to $8.7 trillion. High dollar reserves in foreign countries, particularly in Asia, mean the United States is relinquishing its grip on monetary policy.
"It's very good to be the leader, but the problem is that the U.S. model has become copied by everyone else," Garelli said. "The U.S. constantly needs to reinvent itself because everyone else steals its recipe."
Garelli said the 2007 results highlighted how many of the world's emerging economic powers were catching up with the United States because of government policies better tuned to economic performance. The United States has topped the list every year since 1994.
"London is becoming a very big competitor to New York in investment banking, while Singapore is challenging the U.S. in wealth management," he said. "New companies and new brands are appearing all over the world."
Rounding out the top 10 were Switzerland, Iceland, the Netherlands, Sweden and Canada. Germany made the biggest jump, up nine places to 16th, while South Africa fell furthest, down 12 spots to 50th.
Venezuela was ranked last for the second year in a row, immediately preceded by Indonesia, Croatia, Poland and Argentina.