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Does It Matter If Your Country Is No. 1?


News: Analysis & Commentary: ECONOMICS

DOES IT MATTER IF YOUR COUNTRY IS NO. 1?

Maybe not. But the sniping over country ratings heats up

If nations could climb into the ring and duke it out like Mike Tyson and Evander Holyfield, which would be the world champ? A May 21 report by the World Economic Forum in Geneva has an answer. The world's most competitive nation: Singapore, followed by Hong Kong, the U.S., and Canada.

Turns out that them's fightin' words in economic circles. The International Institute for Management Development, an executive school in Lausanne, Switzerland, known as IMD, begs to differ. It issues its own competitiveness report--and it ranks the U.S. most competitive in the world, followed by Singapore, Hong Kong, and Finland. It also posted its latest report on the World Wide Web (http://www.imd.ch/wcy.html) a few days ahead of the WEF report. The print edition won't come out until mid-June, but the Web results will be updated constantly, even though, in general, macroeconomic trends emerge slowly. "We don't think it's enough anymore just to publish a report once a year," sniffs Stephane Garelli, director of the IMD project.

Such sniping is a sign of the bad blood between the two outfits. It started two years ago when IMD ended a partnership with the WEF after a dispute over how to crunch competitiveness data. Garelli says the groups split up over strategy: WEF, which organizes a glitzy annual conference in Davos, Switzerland, wanted to focus on business clients and IMD on policymakers and academics.

There's also a deep methodological rift. High-profile Harvard University economist Jeffrey D. Sachs, who was brought in to revamp the WEF ratings for last year's report, stopped using GDP figures in WEF's calculations, unlike the IMD. He also refined the way the Forum weighs executive poll results. IMD, meanwhile, uses more hard data--244 criteria, about five times what WEF uses.

Do the reports serve a purpose beyond garnering publicity for their publishers? Neither study claims to predict trends. "I can't imagine that anybody is investing or divesting based on these reports," says Wolfgang Bruel, chief economist at Hoechst, who has seen both. Union Bank of Switzerland devised its own study, which measures the pace of change. Its top four: Singapore, Malaysia, Thailand, and China. "If you're looking to the future, you have to analyze which nation is changing fastest," says William J. Gasser, a senior international economist at UBS.

Some economists, such as Stanford University's Paul Krugman, argue that it's just not valid to rank countries the way you would companies. But that won't stop this battle of the economic boxers.By Thane Peterson in FrankfurtReturn to top

TABLE

A World of Difference

Ratings of nations' competitiveness

WORLD INTERNAT'L INSTITUTE

ECONOMIC FOR MANAGEMENT

FORUM DEVELOPMENT

SINGAPORE 1 UNITED STATES

HONG KONG 2 SINGAPORE

UNITED STATES 3 HONG KONG

CANADA 4 FINLAND

NEW ZEALAND 5 NORWAY

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