Real Numbers: Emerging Economies Coming on Strong

Real Numbers

DEBORAH L. WINCE-SMITH

Emerging Economies Coming on Strong

The Council on Competitiveness released its flagship publication, Competitiveness Index: Where America Stands, last November. While the United States remains the global economic leader, the Index makes the case that its position is not guaranteed. The data and our analysis clearly point to a changing global environment, confirming the need to revisit how the United States will sustain its past position of economic strength and dominance under these new circumstances. The growth of emerging economies will reduce the U.S. share of the global economy, but it is unclear exactly how this will affect U.S. prosperity.

THE GLOBAL ECONOMIC LANDSCAPE IS CHANGING DRAMATICALLY, BUT THE UNITED STATES CAN CONTINUE TO PROSPER AS LONG AS IT CAPITALIZES ON ITS STRENGTH IN DIVERSITY AND CREATIVITY.

Two issues in particular must factor into the calculus as we proceed:

Knowledge is becoming an increasingly important driver of value in the global economy. A larger share of trade is also captured by services, and a larger share of assets and investments is intangible. This shift to services, high-value manufacturing, and intangibles creates more opportunities for the United States with its traditionally strong position in knowledge-driven activities and an already high stock of tangible as well as intangible assets.

Multinational companies are evolving into complex global enterprises, spreading their activities across value chains over different locations to take advantage of regional conditions and competencies. This process creates more competition as regions now must prove their competitiveness in order to attract and retain companies and investments. For the United States, it begs a fundamental rethinking of how states and localities strategize and execute economic development activities.

The United States will almost inevitably be a smaller part of a growing world economy due to the structural changes under way across the globe. However, there is no reason why the United States cannot retain its position as the most productive and prosperous country in the world.

The coming economy will favor nations that reach globally for markets, and those who embrace different cultures and absorb their diversity of ideas into the innovation process. It will be fueled by the fusion of different technical and creative fields, and thrive on scholarship, creativity, artistry, and leading-edge thinking. These concepts are U.S. strengths. These concepts are the nation’s competitive advantage. These concepts are uniquely American—for now.


Deborah L. Wince-Smith is president and CEO of the Council on Competitiveness in Washington, D.C. The full text of The Competitiveness Index can be downloaded at www.compete.org.