Strong showing for Nordic countries in WEF competitiveness rankings
The World Economic Forum (WEF) has placed Finland at the top of its competitiveness rankings for the third year running, with Sweden and Denmark also featuring in the top five. The 2005 Global Competitiveness Report describes Finland as being very well managed at the macroeconomic level, and also rates the country highly in those measures that assess the quality of its public institutions. 'Furthermore, the private sector shows a high proclivity for adopting new technologies and nurturing a culture of innovation,' it adds. Following another strong performance, the WEF's Chief Economist Augusto Lopez-Claros explained: '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, with general agreement within society on the spending priorities to be met in the government budget.' He continued: 'While the business communities in the Nordic countries point to high tax rates as a potential problem area, there is no evidence that these are adversely affecting the ability of these countries to compete effectively in world markets [...]. Indeed, the high levels of government tax revenue have delivered world-class educational establishments, an extensive safety net, and a highly motivated and skilled labour force.' According to the report, therefore, the Nordic countries are challenging the conventional wisdom that high taxes and large safety nets are bad for competitiveness, suggesting that what is important is how well government revenues are spent rather than the overall tax burden per se. The United States retains it second place ranking overall, thanks mainly to its technological supremacy and its strong culture of innovation. However, the report warns that the country's continued technological prowess is partly offset by a weaker performance in other areas, particularly in terms of the health of its macroeconomic environment, where there are increasing concerns about imbalances in public finances. The most noticeable developments elsewhere in Europe are the improvements in the rankings of Ireland, which moves up four places to 26th in the overall standings, Poland, which climbs nine positions to 51st, and the continued strong performance of Estonia, ranked 20th for the second year running and by far the most competitive economy of the ten countries that joined the EU in 2004. The report also notes a significant decline in Greece's ranking, falling from 37 last year to 46 in 2005. 'Greece's worsening performance is linked to a significant weakening in the quality of its overall macroeconomic environment, driven by a ballooning budget deficit and increasing pessimism on the part of the business community about the short-term economic outlook.' Europe's largest economies - Germany France and the UK - also dropped several places in the rankings compared with last year.