Japan Drops to 18th as U.S. Again Tops List of Competitive Nations

Struggling Japan plunged to 18th place on the list of the world’s most competitive nations last year, while the United States stayed in the top spot, a survey released Tuesday showed.

Japan’s nine-place plunge in the World Competitive Yearbook annual rankings reflects the economy’s “complete disarray,” the report said. Only five years ago, the country was in second position.

The U.S., in contrast, held on to its No. 1 place thanks to free-market policies such as privatization and a flexible labor market, the survey said.

“The United States is strongly installed in its position as the most competitive nation in the world,” said Stephane Garelli of the yearbook’s Lausanne, Switzerland-based publishers, the International Institute for Management Development.

“Only a major crash in the stock market or, in the long term, complacency, could threaten a situation which is historically exceptional,” Garelli said.

The study compares the competitiveness of 46 countries by measuring economic strength, the domestic economy’s openness to international trade, government policies, financial services, infrastructure, management, science and technology, education and training.

It defines national competitiveness as a country’s ability to help keep businesses competitive.

Singapore and Hong Kong held second and third places, respectively, as they did in 1997. Singapore “has been less affected than its neighbors by the Asian crisis” but will be affected by the region’s general slowdown, Garelli said.

China jumped to 24th from 27th place. Policies that have generated “staggering” growth helped propel Ireland up the table to 11th from 15th position, the report said.