Infrastructure spending, government debt, and ongoing trade wars have made the United States less economically competitive this year. After falling from number one in 2018, the U.S. tumbled to tenth place in an Institute for Management Development annual ranking of economic competitiveness.
The countries shuffled around considerably between 2019 and 2020. Denmark, Sweden, and Norway all ratcheted up by a few spots, while Hong Kong fell. Singapore ranked at the top of the pile for three years in a row.
The trade war between the United States and China was cited as a major factor in both countries rankings. While the United States fell from 3rd place to 10th, China saw a similar drop in rankings, falling from 14th to 20th place. ‘Trade wars have damaged both China and the USA’s economies, reversing their positive growth trajectories,” the IMD explained.
Other factors were gross fixed capital formation (read: spending on infrastructure, schools, etc) and the growing federal deficit. The exchange rate, and strong levels of high tech exports were cited and strong points for the US economy.
The Institute for Management Development is a business school based in Switzerland. It has ranked the economic situation of 63 countries every year since 1989. The IMD uses hundreds of indicators to rank the countries, ranging from employment and government debt to political stability.