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The Progressive Economics Forum

We’re Number Sixteen!

For as long as I can remember, the Canadian government has been obsessed with “competitiveness.” It is part of the lexicon of government-speak, despite the fact that unlike productivity there is no established measure of “competitiveness”. So the term is more of a values statement than anything else.

To address this shortcoming, the World Economic Forum created an index of global competitiveness. It is about as problematic as any index out there in terms of choices about what gets in, how it is weighted, and whether the outcome is meaningful. But quibbles aside, it is now an annual publication.

This year’s result for Canada: a drop to 16th place. Back when I worked for the feds in the mid-1990s, my Deputy Minister, Kevin Lynch, now Clerk of the Privy Council, wanted us to be number one. The federal government has done everything it has been told to do by the policy elites (like Kevin) and various corporate advisors: we signed the Canada-US Free Trade Agreement then NAFTA and any other trade deal we can get our pens on; we cut taxes then cut them again; we have had a series of program reviews to cut back “wasteful” expenditures; we’ve deregulated so much that we now cynically call it “smart regulation” for a wary public; we’ve privatized public enterprises.

Interestingly, at the top of the WEF list are some of the countries that should be basket cases, according to the conventional wisdom. Switzerland (slightly lower taxes-to-GDP than Canada) gets top spot, up from number four last year. The next three: Finland stays at number two; Sweden jumps from seven to three; and Denmark drops one spot to four. These high-taxing, childcare-providing, union-friendly Nordic countries are consistently at the top of the rankings.

Meanwhile the US dropped from one to six. Ireland, number twenty-one.

Perhaps we need to rethink what makes an economy “competitive” – at least, our policy elites should understand that there are many paths to a strong economy, and the neoliberal model of small government, low taxes and weak unions will not necessarily deliver the goods, yet comes with some nasty side effects such as the poverty and inequality problem we’ve created for ourselves.

From the Globe’s coverage:

Canada, U.S. are less competitive: report

… Canada and the U.S. are seeing their economies become less competitive, while four European countries are now the world’s most competitive nations, a global survey showed Tuesday.

Canada slid to 16th position this year from 13th last year, while the U.S. sank from first spot to sixth, a report by the World Economic Forum showed.

Four European nations — Switzerland, Finland, Sweden and Denmark — assumed the top four spots. Indeed, European countries account for seven of the top 10 most competitive economies this year.

“The top rankings of Switzerland and the Nordic countries show that good institutions and competent macroeconomic management, coupled with world-class educational attainment and a focus on technology and innovation, are a successful strategy,” said Augusto Lopez-Claros, chief economist and director of the Global Competitiveness Network.

The report didn’t specify why Canada slipped in the rankings. But the country’s weakest scores were in the institutions, macroeconomy, higher education, technological readiness and business sophistication categories.

Canada finished strongly in health and primary education along with market efficiency.

…Switzerland’s place at the top of the list “reflects a combination of a world class capacity for innovation and the presence of a highly sophisticated business culture,” the report said.

It added that Swiss companies also spend more on research and development and has a high level of technological innovation. The tiny Alpine nation is sixth in the world for per capita patents registration.

Ireland, a nation touted in recent years as one of the best to do business, finished in the 21st spot, unchanged from last year.

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