From State Science & Technology Institute:

Last week, the World Economic Forum released its annual Global Competitiveness Report, and once again, the U.S. fell in the rankings one more position to fifth place, representing a four-year decline from fourth place in 2010-11, second place in 2009-2010 and first place in 2008-2009. Switzerland held the number one spot for the second year in a row. The report indicates that while many structural features continue to make the U.S. economy extremely productive, a number of escalating weaknesses, such as distrust of politicians, concerns regarding the federal debt, and a lack of macroeconomic stability, have lowered the ranking.

This year’s report points to a seemingly growing trend in the global economy. Emerging markets in Asia experiencing relatively strong growth and attracting capital are contrasted with decelerating growth of advanced economies such as the U.S., Japan, and many European countries.

For the purpose of the report, competitiveness is defined by an index of 12 pillars measured by statistical data such as enrollment rates, government debt, budget deficit, and life expectancy. This year’s top 10 countries are Switzerland (1), Singapore (2), Sweden (3), Finland (4), United States (5), Germany (6), the Netherlands (7), Denmark (8), Japan (9), and United Kingdom (10).

Within the top 10, Singapore moved one place to second position, maintaining the lead among Asian economies, pushing Sweden to third place. Finland moved up three places, Denmark and The Netherlands both moved up one position, and the United Kingdom moved up two spots, placing in the top 10 for the first time since 2007. Countries that fell from their previous positions other than the U.S. include Germany and Japan. The Global Competitiveness Report 2011-2012 is available at: http://www3.weforum.org/docs/WEF_GCR_Report_2011-12.pdf.

At the same time, a report from the nonprofit institute Center for Public Policy Innovation is the latest to unveil findings on how the U.S. can improve its competiveness. Over the past several years, economic development groups and think tanks have promoted similar recommendations on the subject, typically focused on the areas of developing a highly skilled workforce, dedicating more federal funds to R&D, and encouraging entrepreneurship. These themes resonate in CPPI’s report, Restoring U.S. Competitiveness: Navigating a Path Forward through Innovation and Entrepreneurship.

The report is divided among four main topics: Barriers to Entrepreneurship, the Workforce of Tomorrow, Government-Funded Research, and Corporate Tax Reform. Some of the highlights include:

  • Developing new models for technology transfer, such as moving to a free agency model, where entrepreneurial professors would be allowed to choose their own licensing agents from anywhere in the world;
  • Strengthening education in science, technology, engineering and mathematics, especially at the K-12 level, and eliminating barriers to skilled immigration;
  • Instituting a stronger, permanent R&D tax credit; and,
  • Allowing carried interest tax rates for venture capitalists to remain at the current rate to ensure seed and early stage investments remain available for innovative small businesses.

CPPI’s report is available at: http://www.cppionline.org/images/CPPI%20SPECIAL%20REPORT_09062011.pdf.