Nordic States Top of List for Competitiveness

Reviewed by Hitoshi URABE

Article:
Nordic States Top of List for Competitiveness
Financial Times
http://news.ft.com/cms/s/4fb2883c-3087-11da-ba9f-00000e2511c8.html

Comments:

The World Economic Forum (WEF) is known for its hosting annual Davos business forum, where all the colossal figures in the world, not only from the business arena but also politicians and government officials - and the celebrities from arts and entertainment world as well, flock to exchange their views, or just to get acquainted. As such, the forum was for a while a preferred target for anti-business movements, varying from labor forces to environmentalists - the same force that messed up the 1999 WTO Ministerial Meeting in Seattle - seeking every and any opportunity to catch attention.

WEF is also a research body, utilizing its privileged position of having access to real-world business people on top of first-class researchers. Its reports are highly regarded by the people in various sectors and professions around the world.

As reported in the article above, this year's annual report on the Growth Competitiveness Index (GCI) has just been released. The report ranks 117 economies in the world on the potential to grow, based on a number of publicized criteria, through analysis of hard data and supplemented by survey of 11.000 business leaders worldwide.

This year, Japan was ranked as the 12th competitive economy, after, Finland, U.S., Sweden, Denmark, Taiwan, Singapore, Ireland, Switzerland, Norway, Australia, and the Netherlands. Japan was 9th last year, as Iceland, Australia, and the Netherlands overtook Japan after a year.

The GCI is composed of three pillars, which are, Macroeconomic Environment Index, Public Institutions Index, and Technology Index. Japan's place was 8th in the Technology and 14th in the Public Institutions, but was mere 42nd in the Macroeconomy Index. Looking further into the elements comprising the macroeconomy index reveals facts that are even more interesting. Japan was ranked 114th (among 117 economies!) in the government debt scale, and 113th in the fiscal surplus/deficit category. The report in its comment condemns Japan for its lack of fiscal discipline.

The accumulation of public debt in Japan, currently at about 150% of the GDP and still growing fast, seems to be recognized as a serious concern more so outside of Japan than in Japan. There are arguments, at least domestically, that Japan's public debt is not a serious issue, because most of the debt in the form of government bond is purchased and held by the Japanese people, which means, in macro terms, it could be setoff with taxes the government would have to levy anyway to pay out the bonds when it becomes necessary.

It is interesting to see if such argument really works - when the time comes. But in the meantime, until such argument were to be proven viable, the people and the leaders of Japan better be aware that they are living in the world where building up of public debts is generally believed to be a sin.