Scandinavia Dominates Competitiveness Study

From Reuters

Scandinavian countries, with Finland in the lead, have some of the world’s most competitive economies despite high taxes and extensive social security systems, according to a study issued Wednesday.

In the study, the Geneva-based World Economic Forum put the United States in second in its annual competitiveness league but recorded growing business concern over the Bush administration’s handling of the nation’s finances.

Four other Scandinavian nations -- Sweden at third; Denmark, fourth; Iceland, seventh; and Norway, ninth -- were among the top 10 in a table issued with the forum’s Global Competitiveness Report 2005. The others in the top 10 were Taiwan, fifth; Singapore, sixth; Switzerland, eighth; and Australia, 10th, up from 14th last year.

The study, based on hard economic data and business opinion surveys in 117 countries, said the north European nations “are challenging the conventional wisdom that high taxes and large safety nets undermine competitiveness.”


Although their own business communities pointed to high tax rates as a potential problem, “there is no evidence that these are adversely affecting the ability of these countries to compete effectively in world markets or to provide ... some of the highest standards of living in the world,” said Augusto Lopez-Claro, the forum’s chief economist.

The forum, organizer of the annual gathering of global business and political leaders in Davos, Switzerland, has been issuing the report for 26 years.

It says the survey’s findings on the strengths and weaknesses of a wide range of economies help governments in developed and developing countries to identify key areas for reform and policy evaluation.

The study, this year involving 11,000 business leaders in the countries surveyed and a wide range of research institutes, focuses on factors affecting overall economic performance, including technology, innovation and the quality of public institutions.


Finland, the U.S. and Sweden also occupied the top three places in the table last year. The report indicated that the U.S. could have emerged as No. 1 but for worries about current policies and attitudes in Washington.

Although the U.S. enjoyed overall technological supremacy and had a “powerful culture of innovation,” the report said, it ranked low on contracts and law, “with particular concerns on the part of the business community about the government’s ability to maintain arm’s-length relationships with the private sector.”