Morrison
The United States economy which is bigger than that of Japan, China and Germany combined, was knocked off its long-held position as the most competitive, by Switzerland, in the 2009 rankings recently released in the 2009-2010 Global Competitiveness Report. Not surprising, the slippage was the result of the financial crisis that has dragged down US banks' soundness far more drastically than Swiss banks, and was as well reinforced by weakening macro-economic fundamentals.
The United Kingdom, the next major casualty, was also hurt by these factors, which pushed it down one place to 13th position in what was its third consecutive year of decline from the second spot held in 2006.
Ironically, the Swiss, who are well known for their welfare-type system which provides long annual vacation leave for all employees, generous benefits for workers who are terminated, and extended maternity leave, have competed strongly over the years with the USA, which is characterised by a more rugged free-market culture.
Under this US brand of capitalism, employees work more hours annually, with shorter vacation periods, and enjoy less-generous maternity leave or termination benefits. Yet, their high degree of social cohesion, high efficiency levels and top-of-class policy and regulatory framework allow the Swiss to achieve productivity rates that are in line with the greater compensation levels that their citizens enjoy.
financial storm
Even as the global financial crisis has hurt the USA and the United Kingdom, Brazil, China and India continued to record improvements, with Brazil climbing eight places to 56th position in 2008, while China ranked 29th and India 49th, each moving up one spot. These countries have weathered the global financial storm and are now regaining the pace of economic expansion that they had registered before the crisis. Among Caribbean countries, Barbados, Guyana, and Trinidad and Tobago also made gains, as Barbados moved up three places to 44th position, Guyana climbed 11 places to 104th, and Trinidad and Tobago gained seven places to reach the number 86th spot.
Unfortunately, Jamaica dropped five places to 91st position, having slipped by eight places the year before to 86th, and 11 places to 78th position in 2007. Though the list of countries being measured has changed somewhat from what it was in 2005 when Jamaica ranked 60th, it is still a matter for serious concern that the country's rating has been falling. Like Jamaica, the Dominican Republic has lost ground, ranking 95 in 2009, as against 83rd in 2005. Costa Rica, however, continued to regain ground in 2009, but it, too, came out below its position in 2005 and 2006, although it remains the second-highest-ranked country in Latin America.
Of particular note is that the major area where Jamaica's ranking has slipped is in health and primary education, the fourth pillar of the 12 that are used by the World Economic Forum to calculate the global competitiveness index. While our ranking in this area has gone down 11 places to the 88th position, Barbados has upped its ranking from 10th to ninth. Trinidad and Tobago has also improved, moving from the 72nd spot to the 62nd.
What may be contrary to the previously accepted notion of Barbados' superior economic performance, is its ranking at 115th position, down one spot from 2008 in the area of macro-economic stability, as compared with Trinidad and Tobago's jump to the 23rd spot from the 51st in 2008. This, no doubt, is reflecting the massive foreign reserves of Trinidad and Tobago, which are estimated at over US$8.5 billion, that guarantee the twin-island republic import cover of over 10 months. Barbados' foreign reserves, on the other hand, provide five months of cover, or half that of Trinidad and Tobago at a time when tourism, its leading income-earning sector, has been set back by the recession.
Chile maintained its position as the most competitive economy in the Latin American and Caribbean Region, although it slipped two places in the 2009 rankings. Underpinning the strong performance is its high rating in the area of macro-economic stability, though it slipped five places to 19th position, as well as world-class institutional framework, infrastructure, financial system, and efficiency in the operation of its markets. Mexico also has held its own, remaining at 60th spot, although it was one of the economies hit early and severely by the meltdown in world financial markets.
competition
Russia, which had been recovering spectacularly from the economic malaise that gripped the country after the break-up of the Soviet Union, and which had gained new prominence as a member of the fast-emerging BRIC countries [Brazil, Russia, India, China], suffered the deepest decline in its competitiveness. It fell 12 places, and the damage done to its real economy by the financial crisis is not likely to be short-lived. Its heavy dependence on high energy prices as the driver of economic expansion and foreign-reserves accumulation has heightened its vulnerability.
Oil-rich Middle Eastern countries that have invested their surpluses in modernising their economies sustained their upper trend, particularly Qatar, the United Arab Emirates, Bahrain and Kuwait. But the most spectacular performer of all is Singapore, which climbed to the number three spot from eighth position in 2006, consolidating its emergence as a developed country, the most rapid transformation in modern history.
Paradoxically, none of the economies in the Latin American and Caribbean Region that fall within the zone of influence of the world's richest economy has come close to the achievements of Singapore. Singapore's transformation, though, cannot be isolated from the powerful growth dynamics of its East-Asian neighbours and China, which is positioning itself to take over global economic leadership.
Dennis E. Morrison is an economist. Feedback may be sent to columns@gleanerjm.com.