Geneva, Switzerland (GenevaLunch) - Switzerland has taken over the top position in the annual rankings by the Geneva-based World Economic Forum (WEF) in its Global Competitiveness Report 2009-2010, leaving the United States in second place for the first time in a number of years. The WEF says the lower spot for the US is due primarily to “weakening in its financial markets and macroeconomic stability.”

Singapore, Sweden and Denmark are the other top five countries, and European countries dominate the top 10, with Japan and Canada as 8 and 9 respectively. The UK has slipped to 13th place.

The report is compiled by combining publicly available data with an opinion survey of executives around the world.

Switzerland receives high praise in several areas:

Switzerland’s economy continues to be characterized by an excellent capacity for innovation and a very sophisticated business culture, ranked 3rd for its business sophistication and 2nd for its innovation capacity. The country is characterized by high spending on R&D. Switzerland’s scientific research institutions are among the world’s best, and the strong collaboration between the academic and business sectors ensures that much of this research is translated into marketable products and processes, reinforced by strong intellectual property protection. This strong innovative capacity is captured by the high rate of patenting (148.27 per million inhabitants) in the country, for which Switzerland ranks 7th worldwide on a per capita basis. Switzerland’s public institutions are rated among the most effective and transparent in the world (7th), ensuring a level playing field and enhancing business confidence; these include an independent judiciary, a strong rule of law, and a highly accountable public sector.

The low rate of university degrees is given as a weak point, as is the weaker financial sector but “this has been muted compared with many other countries.”

The US, which still has many strengths, is criticized sharply in several areas:

“Some aspects of the institutional environment could be strengthened, with particular concerns on the part of the business community about the government’s ability to maintain arms-length relationships with the private sector (48th), and in the perception that the government spends its resources wastefully (68th).There is also increasing concern related to the functioning of private institutions, with a measurable weakening of the assessment of auditing and reporting standards (down from 20th last year to 39th this year), perhaps not unexpected in the context of recent turmoil and scandals within the financial sector in particular. More generally, given that the
financial crisis originated in large part in the United States, it is hardly surprising that there has been a weakening of the assessment of its financial market sophistication, dropping from 9th last year to 20th overall this year in that pillar.

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