Top Guns of global competition

Thursday 15 May 2008

The year was 1989 and Japan was riding high at the top of the world competitiveness rankings – just ahead of second-placed Switzerland and the perennial nemesis, the US.

 
“Then all hell broke loose,” according to the Swiss-based Institute for Management and Development. “The stock market went into reverse…land prices collapsed in 1992, credit cooperatives and regional banks came under attack in 1994, large banks teetered on the edge of bankruptcy in 1997 and a major credit crunch occurred in 1998.”
 
Nearly twenty years later, Japan is nowhere to be seen on the IMD’s annual ranking of how well “nations compete and manage their path to prosperity”. It now languishes in 22nd place as the country struggles to gain a secure foothold on the road to recovery.
 
By contrast, the US has successfully defended its title of the world’s most competitive economy for 15 years running.
 
But it was apparently a close call this time around.
 
According to the IMD, the world’s biggest economy risks ceding its competitive crown to Singapore and Hong Kong - second and third in the 2008 rankings, respectively - perhaps as early as next year.
 
The latest study asks whether this year might mark “a turning point” for the world's nimblest competitor, one that could force it to forsake the leadership position it's held since 1994.
 
And it draws a direct parallel with Japan’s predicament in 1989, raising the possibility that 2008 could be the Swan Song for the US before its own long slide into economic senescence.
 
But after dangling the doomsday scenario before us (doomsday from an American standpoint, that is), the report’s authors then back away from their own hypothesis. IMD economist Stephane Garelli says that the seeming historic parallels between the two countries belie some significant differences.
 
Namely, writes Garelli, “because of its openness, resilience and entrepreneurship, (the US) always seems to find the means to reinvent itself in ways that Japan…often lacks.”
 
In other words, the IMD believes that the US has several trump cards up its sleeve to help it avert a Japanese-style scenario.