That's according to the 20th edition of the IMD World Competitiveness Yearbook. Since eclipsing Japan in 1994, the US has enjoyed a long run at the top. But we may be vulnerable. This year, we narrowly escaped displacement by Singapore. More interesting is the analysis of how our current situation resembles and, more important, differs from that of Japan 20 years ago. Professor Stéphane Garelli, Director and Suzanne Rosselet-McCauley, Deputy Director of IMD's World Competitiveness Center look at the parallels.
Japan’s competitiveness seemed unassailable, with a strong domination in economic dynamism, industrial efficiency and innovation. Then things went very wrong: the stock market went into reverse in 1989, land prices collapsed in 1992, credit cooperatives and regional banks came under attack in 1994, large banks teetered on the edge of bankruptcy in 1997 and a major credit crunch occurred in 1998. Does this ring a bell?
We're in a relatively stronger position.
On the other hand, the differences between the two economic societies are quite large. Apart from a few notable successes (Canon, Toyota, etc.), by the 1990s, much of Japanese industry was in a paralyzed state. The Japanese never practiced “creative destruction.” The US, because of its openness, resilience and entrepreneurship, always seems to find the means to reinvent itself in ways that Japan (and much of Europe) often lacks.
Here's the Business Week report on the study.
