From the recently released 2005 Global Competitiveness Report, by the World Economic Forum (WEF), we learn the Finland tops the charts for the second consecutive year. The presence of several North-European countries in top ten disproves the thesis that high national tax rates obstruct countries from competing effectively in world markets, or from delivering to their respective populations some of the highest standards of living in the world. The Report is "suggesting that what is important is how well the government revenues are spent, rather than the tax burden per se."
The US continues to hold technological supremacy, and maintain the premiere pipeline of innovation in the world. The US companies are aggressive in adopting new technologies, and spend heavily on R&D. However, the US leadership in these areas is being moderated by its lower performance in other areas measured by the WEF composite index. Macroeconomic imbalances in the country, especially in the area of the public finances, keep the US on the second place. So, despite "overall technological supremacy" the US is downgraded by poor economic management and the perceived negative influence of business lobbies on government policy.
Global Competitive Index
|
| GCI | GCI | |
| Country | 2005 Rank | 2004 Rank | Changes 2004-2005 |
| Finland | 1 | 1 | 0 |
| United States | 2 | 2 | 0 |
| Sweden | 3 | 3 | 0 |
| Denmark | 4 | 5 | 1 |
| Taiwan | 5 | 4 | -1 |
| Singapore | 6 | 7 | 1 |
| Iceland | 7 | 10 | 3 |
| Switzerland | 8 | 8 | 0 |
| Norway | 9 | 6 | -3 |
| Australia | 10 | 14 | 4 |
Source: http://www.weforum.org/
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For those who'd like to understand better what takes place in (Northern) Europe from a socio-economic perspective, I recommend a couple of links.
The first is to Martin Wolf's FT editorial: Europeans can look to each other. Here, Mr. Wolf looks at 4 perspectives, as proposed by André Sapir, a Belgian economist.
The second is to Brad DeLong's blog entry on the same subject: . Four Faces of European Welfare Capitalism. It's worth checking out for the comments section.
For those in a hurry, here are the 4 models:
The “Nordic model”... the highest public spending on social protection and universal welfare provision. Labor markets are relatively unregulated but there are “active” labor market policies, while strong unions deliver a high degree of wage equality.
The “Anglo-Saxon” model... generous social assistance of last resort, with cash transfers going mainly to people of working age. Unions are weak and the labor market relatively unregulated.
The “Rhineland model”... social insurance... pensions. Employment protection is stronger than in the Nordic countries. Unions are also powerful or enjoy legal support for extension of the results of collective bargaining.
Finally, the “Mediterranean” mode... public spending on old-age pensions. Heavy regulation protects (and lowers) employment, while generous support for early retirement seeks to reduce the number of job-seekers....
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