Finland ranked as world's most competitive economy

Northern Europe nation tops U.S. in annual report

Japan, Britain move up

October 14, 2004|By BLOOMBERG NEWS

GENEVA - Japan and Britain are becoming more competitive as confidence in the performance of the world's second- and fourth-biggest economies grows, the World Economic Forum said yesterday in its annual ranking of nations.

Finland outpaced the United States as the world's most competitive economy for the second year, according to the report, which ranks countries by their economies, public institutions and technology levels. Japan climbed two places to ninth position, and Britain rose to 11th from 15th.

"Japan has continued to scale positions," Augusto Lopez-Claros, chief economist at the World Economic Forum, said in a telephone interview. "The UK shows some signs of joining this elite group of countries who manage to juggle the key aspects of what goes to make an economy especially competitive."

Governments are struggling to buttress the competitiveness of their economies to boost their share of global foreign investment, worth an estimated $560 billion a year, as the world economy loses momentum.

The International Monetary Fund forecasts that global economic growth will slow to 4.3 percent next year from a 30-year record of 5 percent this year.

Estonia and Chile also became more competitive, the forum study found. Italy, Australia and Korea were among countries that dropped in the global rankings. Italy, Europe's fourth-biggest economy and a member of the Group of Seven industrialized nations, slid to 47th place from 41st.

Italian economic growth lagged behind the average for the 12 countries sharing the euro in the second quarter, expanding 0.3 percent. The economy will expand 1.4 percent this year, the IMF predicted last month.

By contrast, the Japanese economy will expand three times as quickly, the IMF forecast, after the Bank of Japan pumped extra cash into the economy and kept borrowing costs at almost zero since March 2001. Japan has advanced 12 places, compared with its ranking of 21st three years ago.

In Europe, Britain strengthened its position, in part by curbing inflation and improving property rights, the report found. It ranked first in property rights, compared with eighth place last year, the forum report said.

Europe's second-biggest economy also won $14 billion worth of investment last year, according to the United Nations Conference on Trade and Development. Germany, which ranked 13th in the report, won $12 billion.

Finland topped the ranking for the third year in four. The country, whose population of 5.2 million people is smaller than Baghdad's, leads in collaborations between companies and universities, the forum said.

Nordic countries occupied four of the top ten places in the ranking. Sweden stayed at third place, Denmark dropped to fifth from fourth, and Norway surged to sixth from ninth.

"The Nordic countries are characterized by excellent macroeconomic management overall, have extremely low levels of corruption, and their private sectors are on the forefront of technological innovation," the forum said.

Finnish government finances are ranked third, compared with a rating of 78th for the United States, its closest rival in overall competitiveness. The Bush administration expects a budget deficit of $445 billion in the year that ends Sept. 30, even as the economy ranks first in conditions for individual companies.

The World Economic Forum, funded by more than 1,000 corporations including ABB Ltd., Siemens AG and Merrill Lynch & Co., has published competitiveness reports since 1979. The documents combine economic data and a survey of about 8,700 chief executives around the globe sharing their views on the business environment of the countries.

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