US Falls Down Competitiveness League Table
CNBC EMEA Head of News
The United States fell two places to fourth position behind Switzerland, Sweden and Singapore in this year's World Economic Forum's "Global Competitiveness Report."
Having been knocked off top spot by the Swiss last year, a number of factors are making the US less competitive, according to the WEF.
"In addition to the macroeconomic imbalances that have been building up over time, there has been a weakening of the United States' public and private institutions, as well as lingering concerns about the state of its financial markets," the report said.
All the uncertainty is making life very difficult for governments and central banks, Klaus Schwab, the founder of the World Economic Forum which hosts its annual meeting in Davos every January, said.
"Policy-makers are struggling with ways of managing the present economic challenges while preparing their economies to perform well in a future economic landscape characterized by uncertainty and shifting balances," Schwab said.
"In such a global economic environment, it is more important than ever for countries to put into place the fundamentals underpinning economic growth and development," he said.
Following the election of David Cameron's coalition government, the UK has gained one place to 12th and the major emerging markets continue to rise up the rankings.
"The People's Republic of China at 27th continues to lead the way among large developing economies, improving by two more places this year, and solidifying its place among the top 30," the report said.
Among the three other BRIC economies, Brazil (58th), India (51st) and Russia (63rd) remain stable.
Politicians must not lose sight of competitiveness following three years of crisis, Xavier Sala-i-Martin, a professor of economics at Columbia University and a co-author of the report, warned.
"For economies to remain competitive, they must ensure that they have in place those factors driving the productivity enhancements on which their present and future prosperity is built," Sala-i-Martin wrote.
"A competitiveness-supporting economic environment can help national economies to weather business cycle downturns and ensure that the mechanisms enabling solid economic performance going into the future are in place," he said.