World Competitiveness

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In addition to not inducing and sustaining market-failure, governments should be laying down institutions to support competitive business activity, instead of just supporting specific businesses owned by relatives and cronies of the rulers.

The governments of many countries do this well; others have a long way to go.

IMD has released their 2004 World Competitiveness Rankings. I see some Swiss commentators are absurdly forecasting lower standards of living for children than current adults, and Collin May notes that the big EU nations are far down on the rankings.

The current rankings have the US first, as it has been for 5 years. I won't go into the methodology of the report, which basically results in an enormous index number. This procedure means that results could vary depending on what on thinks is most important for competition.

However, shifting the weights doesn't actually change very much. Another national competiveness assessment, independent of the IMD, has a pretty tight correlation with the IMD report over the past few years.

Also, as much as I'd love to blame the governents of poor countries for their citizens terrifying poverty, and as much guilt as they deserve, I gather that a long-term history of terrible governance is really hard to overcome...

2 Comments

Collin makes a good point that some of these smaller European countries aren't as socialist as they appear. Some of them tax capital less than countries views to be low tax. There was a paper floating around the last week that made this point. Their taxes are less progressive because high marginal tax rates kick in quickly and the VAT. The Netherlands has a remarkedly pro-business attitude, at least it did for the year I spent there. Reform is always slow, but it is proceeding.

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This page contains a single entry by Kevin published on May 10, 2004 1:12 PM.

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