Sunday, September 09, 2012

Competitiveness and Income

Source: The Economist
Of course, the main conclusion one can draw from this graph is that there is a statistical correlation between Competitiveness (as judged by the World Economic Forum) and per capita GDP. Qatar is a newcomer to its current high rank in competitiveness, and it is using its income to build capacities that it hopes will keep it prosperous in the future. I suppose it seeks to be another Switzerland. Some small countries might be compared with the most competitive portions of the United States (e.g. portions of California, Massachusetts, etc.) rather than larger countries (e.g. the United States, Japan, China, India).

Countries build the capacity for high per capita GDP over time (unless they find black gold under their territory), so we can assume that most rich countries have had high levels of competitiveness for a long time. These days, rich countries are also trying to stay richer than the rest by keeping competitiveness high.

Catherine Rampell in the New York Times Economix blog points out that the United States has dropped in competitiveness ranking for the 4th consecutive year.
The main reasons the United States has been slipping in the rankings appear related to distrust of and lack of confidence in government leadership.
The blog post provides a great interactive map helping to understand both the ranking of individual countries and the geography of competitiveness. For example, if we take the European Union as the real competitor for the United States,  we note that EU competitiveness resides in the north west, and not in southern Europe nor the Balkins.

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