The United States is losing ground when it comes to competing in the global economy, falling to seventh in the world, according to a new study.
A report released Wednesday by the World Economic Forum found that the United States had slipped from fifth overall to seventh in terms of global competitiveness over the last year. That ranking place it behind Switzerland, Singapore, Finland, Sweden, the Netherlands and Germany, and it also marks the fourth straight year of decline in competitiveness for the world’s largest economy.
Low public trust in political leaders, a perceived lack of government efficiency and lingering macroeconomic concerns weighed on the U.S. ranking, according to the forum, a nonpartisan foundation best known for its annual meeting in Davos, Switzerland. However, the group did credit the United States as remaining “extremely productive” and a key innovation hub.
But like several other authorities, the forum keyed in on uncertainty about the nation’s fiscal policies, encapsulated in the so-called “fiscal cliff” the nation is set to reach at the beginning of 2013, as a significant weight on the nation’s ability to compete economically.
In August, Standard & Poor’s issued the first-ever downgrade to the nation’s credit rating, citing similar concerns about the ability of the nation’s political leaders to agree on policies to address the nation’s fiscal picture while supporting the ongoing economic recovery. And Federal Reserve Chairman Ben Bernanke has repeatedly appeared before Congress asking lawmakers to change course and avert the influx of automatic spending cuts and tax increases that would thrust the nation back into a recession.
However, the United States is not alone in grappling with political gridlock in the face of tough economic times. Much of the issues surrounding the European debt crisis are political in nature, not economic, and the forum used the report to call on global leaders to take steps to boost the global recovery.
“Persisting divides in competitiveness across regions and within regions, particularly in Europe, are at the origin of the turbulence we are experiencing today, and this is jeopardizing our future prosperity,” said Klaus Schwab, the forum’s founder and executive chairman. “We urge governments to act decisively by adopting long-term measures to enhance competitiveness and return the world to a sustainable growth path.”
Source: The Hill