- inefficient government bureaucracy, 15%
- tax rates, 14.1%
- tax regulations, 10.8%
- access to financing, 9.5%
The US fared better in the other two categories: efficiency enhancers (ranked 2nd) and innovation & sophistication (7). Strengths in terms of efficiency enhancers included domestic market size (#1), redundancy costs (1), tertiary enrollment (2nd), and foreign market size (2). The US was in the top 15 in every component of the innovation/sophistication category led by extent of marketing (3), university-industry collaboration (5), and availability of scientists and engineers (5).
What does the report say about how the US can enhance its competitiveness? It seems that the private sector is doing pretty well, though there's always room for improvement. Clearly, to no one's surprise, the area in need of most improvement involves fiscal policy in general and getting the deficit under control in particular. Though one can debate the specifics, tax reform that eliminates deductions and lowers tax rates can help improve the ranking in terms of tax rates as a percent of profits. Depending on how it's designed, it could also help to reduce the deficit. Entitlement reform and other efforts to reduce the growth of government spending can help remedy the debt-related weaknesses. Basically, the report provides further evidence that policymakers must make serious attempts to reform fiscal policy in order to enhance the competitiveness of the US economy relative to the rest of the world.