According to the The Global Competitiveness Report 2005-2006, released on Wednesday by the World Economic Forum, Finland remains the most competitive economy in the world and tops the rankings for the third consecutive year. The United States is in second position, followed by Sweden, Denmark, Taiwan and Singapore, respectively.

The rankings are drawn from a combination of hard data, publicly available for each of the economies studied, and the results of the executive opinion survey, a comprehensive evaluation conducted by the WEF, together with its network of partner institutes.

"The Nordic countries share a number of characteristics that make them extremely competitive, such as very healthy macroeconomic environments and public institutions that are highly transparent and efficient," said Augusto Lopez-Claros, chief economist and director of the World Economic Forum's Global Competitiveness Programme.

Highlights

• Finland is number one in the Growth Competitiveness Index rankings and holds this position for the fourth time in the last five years. The country is very well managed at the macroeconomic level, but it also scores very high in those measures that assess the quality of its public institutions.
• The United States, as last year, is ranked second: the country demonstrates overall technological supremacy, with a very powerful culture of innovation. However, technological prowess is partly offset by a weaker performance in other areas measured by the index.
  The US has a relatively low rank of 20 for the contracts and law indicator, 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, and in the formulation of policies more generally.
  But the country's greatest weakness concerns the health of its macroeconomic environment, where it ranks a low 47th overall. This echoes the increasingly vocal international concerns about the macroeconomic imbalances in the US economy, especially as regards the public finances.
• The Nordic countries continue to hold prominent positions in the rankings among the top 10 most competitive economies this year, with Finland (1), Sweden (3), Denmark (4), Iceland (7) and Norway (9) all in privileged places.
• China and India, 49th and 50th, respectively, now rank much more closely to one another than in previous years. While China dropped 3 ranks, India moved up 5 places.
  China had a slightly deteriorating score with regard to the country's macroeconomic environment, while India's improved position is due to a somewhat higher rank in the area of technology.
  Both China and India have had an excellent growth performance in recent years. However, both countries continue to suffer from institutional weaknesses, which, unless addressed, are likely to slow down their ascension to the top tier of the most competitive economies in the world.
• Leading within Asia are Taiwan and Singapore, ranked 5th and 6th respectively, some places ahead of the next Asian country covered by the GCI, Japan, ranked 12th. The distance between these top-ranked economies and Japan has increased since last year, reflecting Japan's relatively poor macroeconomic performance, particularly as regards management of the public finances.
• Compared with the other tigers, Hong Kong is ranked much lower at 28th place, having dropped 7 places since last year. This is attributable to a tangible deterioration in the quality of the institutional environment. Hong Kong saw a weakening in perceived judicial independence, the protection of property rights, and in government favouritism in policy-making.
• In Europe the most notable developments are the improvement in the relative position of Ireland, which has moved up 4 places to 26 in the overall rankings and the improvement of Poland, which has moved up 9 places to 51st place in the rankings.
• Australia, in 10th place, has moved up 4 places since last year, with improvements across many of the institutional and technology indicators measured by the index.
• Mexico has fallen 7 places since last year to 55th, ceding its second spot in the regional ranking to Uruguay, while Brazil fell 8 places to 65th position.

"Policy-makers are presently struggling with ways of intelligently managing global risks, while preparing their economies to perform well in an economic landscape characterized by growing complexity," noted Klaus Schwab, founder and executive chairman of the World Economic Forum.

• The rankings

The World Economic Forum has been producing The Global Competitiveness Report for 26 years.

This year nearly 11,000 business leaders were polled in a record 117 economies worldwide. The survey questionnaire is designed to capture a broad range of factors affecting an economy's business environment that are key determinants of sustained economic growth.

Particular attention is placed on elements of the macroeconomic environment, the quality of public institutions, which underpin the development process, and the level of technological readiness and innovation.

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