The Geneva-based World Economic Forum (WEF) has ranked Switzerland the world's second most competitive economy after the United States.This content was published on October 31, 2007 - 12:34
Switzerland dropped from first place last year in the WEF's Global Competitiveness Report, however changes in the calculation methodology make direct comparisons with prior rankings redundant.
WEF Chief Economist Margareta Drzeniek told swissinfo that Switzerland was doing all the right things to remain in the top ten.
"Switzerland is still a good place to do business. In terms of public institutions, red tape etc, it is very well managed. It is also a very good environment for innovation, where it has even improved since last year," she said.
The top ten for 2007 remain the same as in 2006, albeit in a slightly different order. Europe is strongly represented with Denmark, Sweden, Germany and Finland placed third to sixth respectively. Singapore and Japan secured seventh and eight places while Britain and the Netherlands were ranked ninth and tenth.
The main change from last year is that the US has moved up from sixth to first place. In the interests of comparison, the WEF recalculated the 2006 list to reflect this year's way of assessing competitiveness. The adjusted list is topped by the US, with Switzerland in fourth place.
The sheer size of the US market made it "arguably the country with the most productive and innovative potential in the world", the WEF said. The emerging economies of China and India were placed 34th and 48th respectively this year.
The report says Switzerland is characterised by an excellent capacity for innovation and a very sophisticated business culture, ranked first overall in this area.
It notes that Switzerland is endowed with top-notch scientific research institutions and high spending on research and development relative to the country's small size.
"Strong collaboration between the academic and business sectors ensures that much of its basic research is translated into useful products and processes on the market, buttressed by strong intellectual property protection," the report states.
The 2007 survey looked at the business environment in 131 countries. "The report is based on a survey of 90 business leaders in each country, complemented by hard data," Drzeniek said.
"The aim of the report is to show where countries can improve to make growth more sustainable. It provides a basis for policymakers," she explained.
The report includes comprehensive listings of the main strengths and weaknesses of countries, making it possible to identify key priorities for policy reform.
The competitiveness index found many European countries, "especially Switzerland, Norway and Spain, to have wages much above the level supported by their competitiveness".
However Switzerland did well overall in labour market efficiency, which also takes into account relations between labour organisations and employers, taxation, flexibility in pay and recruitment and female participation in the workforce.
In this year's other annual survey of world competitiveness published by the IMD business School in Lausanne in May, Switzerland was placed sixth.
Switzerland's "excellent" economic performance - second for the current account balance and fourth the employment rate, unemployment and direct investment flows had a strong impact on its IMD ranking.
Reacting to the WEF report on Wednesday, Swiss economists said that the country's top ranking meant that it should not, however, rest on its laurels.
State Secretariat for Economic Affairs chief economist Aymo Brunetti warned that even if the country had done very well over the past few years, it was important to look to the future and to continue with economic policy changes.
Brunetti's counterpart at the Swiss Business Federation economiesuisse, Rudolf Minsch, said that in the long term there were dangers for the Swiss in the areas of innovation and workforce flexibility.
Both economists pointed out that the country's relatively low university enrolment could be explained by the fact that Switzerland placed strong emphasis on its apprenticeship system.
This was highly important for the economy, they said.
Global Competitiveness rankings:
1. United States
Bottom of table:
The WEF rankings are calculated from both publicly available data and the Executive Opinion Survey, an annual survey conducted by the WEF and its partner institutes.
This year, more than 11,000 business leaders were polled in 131 countries.
The rankings are based on 12 pillars of competitiveness: Institutions, Infrastructure, Macroeconomic Stability, Health and Primary Education, Higher Education and Training, Goods Market Efficiency, Labour Market Efficiency, Financial Market Sophistication, Technological Readiness, Market Size, Business Sophistication and Innovation.
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