WASHINGTON -- A lack of economic stability highlighted by a soaring national debt, combined with a lack of trust in government by the business community, helped drop the U.S. two notches to seventh in a ranking of national global competitiveness.
For the fourth straight year, Switzerland topped the list, which was released Wednesday by the World Economic Forum. Also beating the U.S. in the 2012-13 rankings of 144 national economies were Singapore, Finland, Sweden, the Netherlands and Germany.
Britain, Hong Kong and Japan rounded out the top 10 in the rankings done by the group, which is best known for its annual gathering of economic and political leaders in Davos, Switzerland.
Competitiveness is determined based on a dozen factors, including the strength of a nation’s public and private institutions, the state of its infrastructure, the quality of its education and its ability to foster innovation.
The U.S. actually improved its overall score from last year, but continued to slip down the rankings as its improvement was outpaced this year by the Netherlands and Germany.
The U.S. ranked fourth on the 2010-11 list and fifth on the 2011-12 list.
The latest rankings come amid a heated political debate among Republicans and Democrats about whether the U.S. and its residents are better off now than they were when President Obama was elected four years ago.
“U.S. companies are highly sophisticated and innovative, supported by an excellent university system that collaborates admirably with the business sector” in research and development, the World Economic Forum report said.
“Combined with flexible labor markets and the scale opportunities afforded by the sheer size of its domestic economy -- the largest in the world by far -- these qualities continue to make the United States very competitive,” the report added.
But several factors helped push the U.S. down the rankings.
The report said the biggest weakness was the U.S. macroeconomic environment -- a combination of the nation’s budget deficit, savings rate, inflation, government debt and credit rating. The U.S. ranked 111th in that category in the aftermath of the growing national debt and the decision by Standard & Poor’s last year to cut the U.S. credit rating.
The business community’s distrust of government also lowered the U.S. rankings. For example, the U.S. ranked 54th in public trust of politicians, and 76th in both wastefulness of government spending and burden of government regulations.
Worldwide, there continues to be a major divide in competitiveness across regions and even within regions, such as Europe, that “are at the origin of the turbulence we are experiencing today” said Klaus Schwab, executive chairman of the World Economic Forum.
“We urge governments to act decisively by adopting long-term measures to enhance competitiveness and return the world to a sustainable growth path,” he said.