Business versus the State: the World Economic Forum

The World Economic Forum’s  Global Competitiveness Report has been released. You can read a summary in the Washington Post or go directly to download the report and the fascinating data tables here. As one might expect, the US has slipped from first to fourth (of 139 nations) over the past several years. Some of the data on how the US is doing relative to its competitors is disturbing. For example,

• Government budget balance relative to GDP (117^th), placing the US between the UK and Romania
• Size of the government debt relative to GDP (122^nd ), placing the US between Côte d’Ivoire and Hungary.
• National savings rate (130^th ), placing the US between Burundi and Serbia

These are based on official data sources. What I find far most interesting  are some of the data tables that speak to corporate perceptions of the government. The data is collected as part of the World Economic Forum’s Executive Opinion Survey.

• Protection of property rights (40^th), placing the US between Gambia and Malaysia
• Diversion of public funds to companies, individuals, or groups due to corruption (34^th), placing the US between Botswana and Chile
• Public trust of politicians (54^th), placing the US between Estonia and the UK
• Favoritism in decisions of public officials (55^th), placing the US between Lithuania and Tajikistan.
• Irregular Payments and bribes to public officials (40^th), placing the US between Spain and Poland
• Wastefulness of government spending (68^th), placing the US between Ghana and El Salvador
• Burden of regulation (49^th), placing the US between Guyana and Jordan
• Efficiency of  legal framework in settling business disputes (33^rd), placing the US between Botswana and Ireland
• Efficiency of legal framework in challenging regulations (35^th), between Uruguay and Gambia
• Transparency of government policymaking (41^st), placing the US between Saudi Arabia and India
• Taxation: Data table 6.04 presents the rank ordering of nations based on the question: “What impact does the level of taxes in your country have on incentives to work or invest?” The US falls 71^st out of 139 nations (the better the ranking, the less the perceived impact of taxation).  Data table 6.05 rank orders nations based on the total tax rate on businesses. The US, with a total tax rate of 46.3 percent has a higher rate than 88 of the 139 nations.

The US has long had an anti-statist culture and there has long been an adversarial relationship between business and the state. But I must admit, I find these figures striking. If we assume that economic recovery depends on corporate investment decisions, and these decisions are influenced by perceptions of the larger political-institutional environment, none of this can be good news.