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Sweden drops in global competitiveness ranking

5 Sep 2012, 12:17

Published: 05 Sep 2012 12:17 GMT+02:00

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Last year, Sweden grabbed the third spot in the annual Global Competitiveness Report compiled by the organization that hosts the get-together of business and political leaders held each year in Davos, Switzerland.

But in the 2012-2013 report, released on Wednesday by the World Economic Forum (WEF), Sweden found itself overtaken by neighbouring Finland, which grabbed the third spot ahead of top ranked Switzerland and second-place Singapore.

The report praised Sweden's public institutions as "first-rate", citing their efficiency and transparency.

In addition, private firms in Sweden received high marks from the WEF for their "excellent ethical behavior".

"Nevertheless, we registered a slight but consistent deterioration in the country’s institutional framework over the past three years," the WEF wrote in its report.

While Sweden received top marks for technology readiness, it was ranked close to the bottom of the 144 countries when it came to the flexibility of wage determination, as well as the country's hiring and firing practices.

The organization also cited Sweden's relatively high youth unemployment rate as one reason for its slightly weaker performance on the WEF's review of the social sustainability of countries' competitiveness.

According to the WEF, Sweden's tax rates and restrictive labour regulations are the most problematic factors for doing business in Sweden.

While European countries, especially in the north, continue to dominate the list of the world's 10 most competitive nations, those in the southern part of the continent dipped further down the list.

Crisis-hit Greece, for instance, slipped to 96th place out of the 144 countries ranked, from 90th last year, while Portugal dropped to 49th from 45th place and Spain held its ground at 36th.

France also fell off the top 20 list, dropping to 21st place from 18th last year and 15th in 2010.

While WEF economist Thierry Geiger told AFP this small but negative trend in was worrying because it reflected a significant drop in French government efficiency in the past couple of years, as well as in the macroeconomic environment and especially labour market efficiency.

The United States, which just five years ago topped the WEF ranking, also continued its decline, falling to seventh place from fifth last year.

WEF senior economist Margareta Drzeniek Hanouz stressed that the United States "still has one of the most sophisticated business environments in the world."

Story continues below…

However, she told AFP, the country is facing large "macroeconomic vulnerabilities", including the rising deficit, and at the same time severe political deadlock and a dwindling trust in politicians.

"This results in an inability to address some of the major problems they're facing," she said, stressing that the politician fatigue was directed at both of the country's main political parties.

The WEF report was based on publicly available data and a survey of 15,000 business leaders in 144 countries.

The Local/AFP

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Your comments about this article

13:25 September 5, 2012 by Rishonim
While Sweden received top marks for technology readiness, it was ranked close to the bottom of the 144 countries when it came to the flexibility of wage determination, as well as the country's hiring and firing practices.

In the hiring practices we should include Swedes employers prejudice towards hiring talented people on the basis of their names and the colour of their skin.
13:59 September 5, 2012 by Programmeny
Give this man a beer.
14:31 September 5, 2012 by Abe L
#1 - Playing the racism card every time you don't get hired doesn't get you any credit with potential employers either.

In my experience we're seeing a very strong turn to hiring the actually most qualified person regardless of origin. The only downside to Swedish employers is that they still value knowledge of the Swedish language to much. This is just a matter of time, the younger generation(s) put no value on that whatsoever, even more in jobs where Swedish plays no role at all.
15:57 September 5, 2012 by eppie
So maybe the 'not-so-flexibility' in wage determination is actually a good thing!?

Sweden, without the low mark on that particular point, would maybe be even higher up in that list
20:42 September 5, 2012 by Uncle

Sweden is fourth in the WORLD and it is presented as a failure. As long as a country is within the first 20, there is absolutely nothing to moan about. These are economies that have strong niche, solid market, no corruption, healthy growth and innovative approach.

"Dropping" from third to fourth place has zero significance and therefore this is clearly an attempt from the journalist to present his article as more important than it really is.
23:09 September 5, 2012 by tigger007
People comments are kind of spot on! Sweden has a good control if it's finances and infastructure,Sweden mirco-manage it's economy because it has too.When your taxes pays for your the majority of your infastructure you have to be on your P' and Q's.Sweden can't play this''Casino Mentality''if a small control like Sweden was to have taken bit hits like America did in this housing crisis Sweden would have fallen.People can play this race card and in some cases it is the case,but not in all cases.You have to learn swedish out of respect,the old guard is still in place and they won't let the job market be determined by nonswedes who didn't speak swedish

I know that there is a prejudice towards nonscandinavians and something most be done all in good time.Flexibility of Wage is a good and bad thing it keeps people from asking for way out pay,but keeps talented people away from the job market.
02:32 September 6, 2012 by Eric1
At least Sweden is still ahead of the USA thanks to the Democrat party and Nobel Peace Prize winning Chairman President Obama.
03:04 September 6, 2012 by Frank Lee
These criteria sound deeply subjective. What good does it do Qatar if the country rates higy on this scale if the average Qatari can't think for himself?
07:26 September 10, 2012 by franciaB
I think it's not just a significant drop in French government but as well as with other nearby countries. In fact, the World Economic Forum says that, due to "low public trust in political figures and a recognized lack of government efficiency," the U.S. is not as competitive in the world market as it was a year ago. The WEF recently released its yearly competition rating survey. The government has taken out huge U.S. competitiveness ranking slips again, says WEF and now they have to deal with it.
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