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Is the US #1, or #What?

A new report by the World Economic Forum might finally dispel the myth that America is the #1 country in the world.

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The latest annual ranking of 144 countries, on a wide range of factors related to global economic competitiveness, is “The Global Competitiveness Report 2012-2013,” by the World Economic Forum. Their research includes some stunning findings.

On each of their many rankings, #1 represents the best nation, and #144 represents the worst nation.

The U.S. ranks as #1 on only 4 out of the 117 different factors that are rated, and each of these 4 factors concern merely the sheer size, the hugeness, of the U.S. economy. These four factors might thus collectively be identified as Hugeness: “GDP,” “GDP as a Share of World GDP,” “Available Airline Seat Kilometers,” and “Domestic Market Size Index.” Other than Hugeness, the results for the U.S. are not at all outstanding.

Health Care shows the U.S. ranking as #34 on “Life Expectancy,” and as #41 on “Infant Mortality.”

Education in the U.S. is also mediocre. On “Quality of Primary Education,” we are #38. On “Primary Education Enrollment Rate,” we are #58. On “Quality of the Educational System,” we are #28. On “Quality of Math and Science Education,” we are #47. On “Quality of Scientific Research Institutions,” we are #6. On “PCT [Patent Cooperation Treaty] Patent Applications [per-capita],” we are #12. On “Firm-Level Technology Absorption” (which is an indicator of business-acceptance of inventions), we are #14.

Trust is likewise only moderately high in the U.S. We rank #10 on “Willingness to Delegate Authority,” #42 on “Cooperation in Labor-Employer Relations,” and #18 in “Degree of Customer Orientation” of firms.

Corruption is apparently a rather pervasive problem in the U.S. On “Diversion of Public Funds [due to corruption],” the U.S. ranks #34. On “Public Trust in Politicians,” we are #54. On “Irregular Payments and Bribes,” we are #42. On “Judicial Independence,” we are #38. On “Favoritism in Decisions of Government Officials” (otherwise known as governmental “cronyism”), we are #59. On “Organized Crime,” we are #87. On “Ethical Behavior of Firms,” we are #29. On “Reliability of Police Services,” we are #30. On “Transparency of Governmental Policymaking,” we are #56. On “Efficiency of Legal Framework in Challenging Regulations,” we are #37. On “Efficiency of Legal Framework in Settling Disputes,” we are #35. On “Burden of Government Regulation,” we are #76. On “Wastefulness of Government Spending,” we are also #76. On “Property Rights” protection (the basic law-and-order measure), we are #42.

Investors find somewhat shaky ground in the U.S. On “Strength of Investor Protection,” we are #5. On “Protection of Minority Shareholders’ Interests,” we are #33. On “Efficacy of Corporate Boards,” we are #23. On “Reliance on Professional Management,” we are #19. On “Strength of Auditing and Reporting Standards,” we are #37. On “Venture Capital Availability,” we are #10. On “Intellectual Property Protection,” we are #29. On “Soundness of Banks,” we are #80. On “Regulation of Securities Exchanges,” we are #39. On “Country Credit Rating,” we are #11. On “Government Debt [as a % of GDP],” we are #136. On “Effectiveness of Anti-Monopoly Policy,” we are #17. On “Extent of Market Dominance,” we are #9.

Technology is moderately good here. The U.S. ranks #14 on “Availability of Latest Technologies,” #24 on “Internet Access in Schools,” #20 on “Internet Users [%],” #33 on “Internet Bandwidth [per user],” and #8 on “Mobile Broadband Subscriptions [%].”

Infrastructure is fairly good in the U.S. We rank #25 on “Quality of Overall Infrastructure,” #33 on “Quality of Electricity Supply,” #30 on “Quality of Air Transport Infrastructure,” #19 on “Quality of Port Infrastructure,” and #20 on “Quality of Roads.”

Taxes also definitely don’t qualify as being good in the U.S. We rank #69 on “Extent and Effect of Taxation,” in which the “Effect” that’s considered is reducing the “incentives to work or invest.” We are #103 on “Total Tax Rate,” #47 on “Number of Procedures Required to Start a Business” (which is an indirect tax), and #50 on “Prevalence of Trade Barriers” (both tariff and non-tariff).

The U.S, overall, is very far from being #1 – not really in contention, at all, for the top spot. The rankings suggest instead that this nation is sinking towards the Third World. The nations that stand high in most of these lists are: Finland, Switzerland, Singapore, New Zealand, Denmark, Sweden, Norway, Japan, Canada, Qatar, Netherlands, Iceland, Ireland, U.K., and Hong Kong.

The nations that generally rank in the bottom half of these rankings are the ones that are typically cited as being “Third World,” or poor.

However, the WEF applies a complicated formula (not fully explained), which weights each factor differently for different countries in order to produce an overall ranking for each country. As a result, the U.S. receives an overall ranking of #7, which is much better than would be the case if all of the factors had been considered equally. Based upon the vague explanation that is provided, it seems that the factors on which the U.S. ranked the worst were considered relatively unimportant determinants of the overall rated economic performance of this country. Of the 117 different factors that were ranked, the U.S. scored among the top 7 on only 18 factors; and so, these 18 factors must have far outweighed all of the other 99 factors combined. Here are these 18, apparently overriding, factors: GDP, Population, GDP as a Share of World GDP, Strength of Investor Protection, Available Airline Seat Kilometers, Malaria Incidence, Tuberculosis Incidence, Tertiary Education Enrollment Rate, Brain Drain (attractiveness to talented people), Redundancy Costs, Domestic Market Size, Foreign Market Size, Extent of Marketing, Capacity for Innovation, Quality of Scientific Research Institutions, Company Spending on R&D, University-Industry Collaboration in R&D, and finally, Availability of Scientists and Engineers.

By contrast, for examples: U.K. ranked among the top 7 on 20 factors but ranked only #8 overall; Denmark ranked among the top 7 on 22 factors but ranked only #12 overall; Canada ranked among the top 7 on 17 factors but ranked only #14 overall; and Norway ranked among the top 7 on 20 factors but ranked only #15 overall.

Here were the top-rated countries: Switzerland scored among the top 7 on 52 factors and ranked #1 overall; Singapore ranked among the top 7 on 62 factors and ranked #2 overall; and Finland ranked among the top 7 on 53 factors and ranked #3 overall.

Here are the numbers of #1 rankings for each of the top three countries: Switzerland 14; Singapore 12; Finland 9.

Perhaps the main reason the U.S. ranked as high as #7 overall is that this country is larger than most of its competitors. The only other large countries among the top 10 overall were #6 Germany, and #10 Japan. Germany ranked among the top 7 on 22 factors, and was ranked #1 on 3; Japan ranked among the top 7 on 25 factors, and was ranked #1 on 8. But, of course, the U.S. is even larger than either of those two countries.

The U.S. had an extraordinarily large number of very low rankings for a country that received such a high overall ranking (#7). For example, the #7-ranked U.S. scored #100 or worse among all 144 countries on 6 factors. By comparison, #6 Germany scored #100 or worse on only 4; #8 U.K. also scored #100 or worse on only 4; #12 Denmark scored #100 or worse on only 2; #14 Canada scored #100 or worse on only 3; and #15 Norway scored #100 or worse on only 3. And at the top-scoring end, Switzerland scored #100 or worse on only 2; Singapore on only 1; and Finland on only 1.

Perhaps because of America’s sheer global political clout, the WEF simply tilted this country’s overall ranking, in order to keep us in the top 10. Many of the factors where America didn’t score high look substantial, not just minor.

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