By Arnold Kling
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.”