Sunday, December 04, 2005

Decline and fall

The Business today reveals that Europe’s economies have taken a tumble in the world competitiveness league tables, while the United States and Asia’s new economic giants continue to prosper.

Its sources were a series of reports, one from AT Kearney, the management consultants, assessing the attractiveness of key cities around the world as a destination for foreign investment. China came second, followed by Malaysia, the Philippines and Singapore. The US came in at number 11, a far stronger position than the UK, which was ranked 28th. Germany and France were 31st and 35th, respectively, largely due to higher costs and weaker business environments.

Thus, despite generally high education levels and infrastructure quality, European long-term competitiveness is being gradually eroded by the high cost and rigidity of the business environment. US workers offer better value for money than those in nearly all other developed countries, including Germany, the UK, Japan and Canada. While France boasts workers with higher productivity per hour than the US, companies are not interested in hiring its workers because of excess red tape.

Another report, this one from Ashworth, shows the US economy is continuing to outperform. GDP growth was pushed up to 4.2 percent last week, and productivity growth could be raised to nearer 5 percent. Annual labour productivity growth was just below 3 percent in the year to the third quarter, a remarkable rate for this stage in the economic cycle.

Furthermore, despite the prophets of doom, third-quarter GDP figures for the US also revealed that, after excluding the effects of the recent hurricanes, corporate profits rose to their highest level relative to GDP since 1966.

Basically, Europe is heading for "basket case" status, with its workforce on the dole, while the rest of the world leaves it behind. And we still want to be part of this?

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