By Valentin Schmid, Epoch Times | October 5, 2015
Last Updated: October 5, 2015 11:15 am
A Chinese dancer at the New York Stock Exchange (NYSE) on July 27, 2015. (Spencer Platt/Getty Images)
China’s economy must be more competitive than the United States, after all they sell more goods to us than we sell to them.
The World Economic Forum (WEF) challenges this singular view of competitiveness which it defines as “the set of institutions, policies, and factors that determine the level of productivity of an economy, which in turn sets the level of prosperity.”
According to the WEF research, it turns out the United States has the edge in 9 categories (rank out of 140 countries in brackets), let’s look at the most important ones to compete in the 21stcentury.
Institutions (U.S. 28 / China 51)
This section examines the country’s legal and administrative framework, both public and private. Does the rule of law prevail? Are government officials and companies corrupt? Are property rights protected?
The U.S. does better here than China but barely makes it in the top quintile. Ironically, the low ranking (60) of security (reliability of the police, business cost of terrorism) drags down the quality of public institutions whereas private institutions rank in the top decile (15) for accountability (reporting standards, investor protection).
Security is also dragging down China’s public institutions ranking (70) and it ranks bottom third for accountability of private institutions (97).
The World Economic Forum compares the competitiveness of China and the United States across 12 pillars. The United States wins 9. (World Economic Forum)
Labor Market Efficiency (U.S. 4 / China 37)
The WEF thinks labor markets are efficient if workers can move from one activity or job to another with little friction and the economy is based on meritocracy rather than corruption. Is it easy to hire and fire? Are workers rewarded according to their value-added?
According to the WEF, China’s labor market is quite rigid. In ranks 81 in flexibility of hiring and firing and the effect of taxes on employment. Surprisingly it ranks 26 in the efficient use of talent which looks at pay and productivity and the capacity to retain talent.
Nothing compared to the U.S. though, which is second only to Switzerland regarding the efficient use of talent and ranks eight in terms of labor market flexibility.
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Higher Education and Training (U.S. 6 / China 68)
WEF: “This pillar measures secondary and tertiary enrollment rates as well as the quality of education as evaluated by business leaders. The extent of staff training is also taken into consideration.”
U.S. shares first place with six other nations who all get a 7 out of 7 for the quantity of education. When it comes to quality, it is still ranked 18 and 14 for on the job training.
China is ranked 54 for on the job training, 52 for the quality of education and 77 for the quantity. Way to go.
Innovation (U.S. 4 / China 31)
Are companies able to develop cutting edge products and technology rather than just copying others? Are both public and private sectors supporting an environment which fosters these activities? How much does the private sector invest in research and development (R&D)?
The U.S. ranks highly across all subsections, but the quality of its scientific research institutions (2) and the collaboration between businesses and universities (2) stand out.
China is relatively high up the ladder when it comes to the government procurement of advanced technology products, although in this case their origin may be rather dubious. The country only ranks 49 in the general category “capacity for innovation.”
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Technological Readiness (U.S. 17 / China 74)
WEF: “The technological readiness pillar measures the agility with which an economy adopts existing technologies to enhance the productivity of its industries.”
China ranks low across the board, like in the general availability of the latest technologies (95) and internet use and availability (76).
The U.S. also has room for improvement. It ranks 20 in internet use and availability, but eight in technological adoption of the latest technologies.
The 12 pillars of competitiveness. (World Economic Forum)
http://www.theepochtimes.com/n3/1871977-5-ways-the-us-is-more-competitive-than-china/
