The U.S. dethroned Hong Kong to retake first place among the world’s most competitive economies, thanks to faster economic growth and a supportive atmosphere for scientific and technological innovation, according to annual rankings by the Switzerland-based IMD World Competitiveness Center.
Hong Kong, scoring first in categories for government and business efficiency, held an edge over regional rival Singapore, which kept its No. 3 spot from 2017. Rounding out the top five were the Netherlands, which jumped one spot, and Switzerland, which tumbled three slots as it endures a slowdown in exports and concerns about its potential relocation of research and development facilities.
The U.S., which reclaimed the No. 1 spot for the first time since 2015, scored especially well in international investment, domestic economy and scientific infrastructure sub-categories while earning below-average marks in public finance and prices.
The renewed top ranking aligns with the positive U.S. growth narrative over the past year. Growth averaged 2.9 percent in the four quarters through March, versus 2 percent in the prior period.
Notable improvements in the rankings from last year included Austria, which advanced seven spots to 18th position, and China, which jumped five spots to No. 13. For China, the world’s second-biggest economy, investment in both physical and intangible infrastructure and adjustments to regulation helped boost its performance, according to Arturo Bris, director at the IMD.
As with Bloomberg Innovation Index rankings earlier this year, economies in northern Europe outperformed. Denmark, Norway, and Sweden were among the top 10 in IMD’s rankings, while the United Arab Emirates was the sole Middle Eastern nation to be included.
At the bottom of the rankings were some usual suspects, with embattled Venezuela still ranked as the worst. Mongolia maintained its spot as second-to-last of the 63 economies. Brazil showed an improvement, with some healing in growth and hiring.
IMD used 258 indicators on economic performance, government efficiency, business efficiency and infrastructure, and gave weight to “hard” data, including trade statistics, twice as heavily as “soft” sentiment data. The group has published the results every year since 1989.