Graph of the week: global competitiveness

The Economist compares the World Economic Forum's competitiveness index with GDP p/c:

Source: The Economist, 05/09/2012
Switzerland, Singapore, Sweden and Finland top the competitiveness list, which isn't surprising as the same group of countries usually top the freedom index categories as well. The countries that close the top 10 group are Netherlands, Germany, US, UK, Hong Kong and Japan. What is mildly surprising here is the decline of the United States, which has been dropping on the list persistently for the past four years (a quick glance at its productivity shows why). Looking at the Eurozone "periphery", it too is experiencing declining competitiveness which should hardly come as a surprise to anyone. However the reason the "periphery" countries are still above the trend-line is that they are (or at least were) relatively wealthy countries which have experienced a decline in competitiveness and productivity. In the end this amounts to their relative wealth decreasing (i.e. they are becoming poorer). This is not something that happened recently. The crisis only exacerbated their decline, but the productivity problem and the unsustainable welfare state model were present years before.  

Comparing this data to GDP p/c infers that higher competitiveness can bring more wealth, after a certain threshold (in here that would be around 4.5 or even higher, rough estimate). But the real question is, how does one increase competitiveness? The answer: there is no quick fix. If anything, at least try and learn the lessons from successful examples


  1. It should be a surprise to no one that our competitiveness has shrank in the last four years.

    It seems that having a party of looters and economic fascists in power actually does produce negative results.

    It certainly cannot do any good when you have a leader who continually bashes his nations own business community.

    Or when you have a central bank which seems to have no idea what they are doing.


Post a Comment

Popular posts from this blog

Short-selling explained (case study: movie "Trading Places")

Rent-seeking explained: Removing barriers to entry in the taxi market

Economic history: mercantilism and international trade

Graphs (images) of the week: Separated by a border